Technical studies and charting

TECHNICAL STUDIES AND CHARTING

Technical analysis has witnessed the development of a large number of technical studies or technical "indicators" over the past several years. I would like to tell you details of technical study below for a definition and to learn how it may be applied to Forex trading and you must know and understand that technical Analysis is not enough for Professional Forex Trading as I give you an example to how to  drive a Car. It means you know all driving functions of Car and how to applied them for safety drive!!!..

And If you are new in Forex so you must visit following links before going to Advance topic


what is forex
Forex Prices
Currency Pairs

Here are some basic Trend,Oscillators, and Volume Indicators 

• Bollinger Bands
• Moving Averages
• Parabolic SAR
• MACD
• RSI
• Momentum
• Stochastic
• Slow Stochastic
• CCI ("Commodity Channel Index")
• ATR ("Average True Range")
• Rate of Change
• Standard Deviation

In my Next Post I will describe above technical "indicators" with practical example. so Stay tuned!!!! for more ...........

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Support and Resistance Levels

One use of technical analysis, apart from technical studies, is in deriving "support" and "resistance" levels.  The concept here is that the market will tend to trade above its support levels and trade below its resistance levels.  If a support or resistance level is broken, the market is then expected to follow through in that direction.  These levels are determined by analyzing the chart and assessing where the market has encountered unbroken support or resistance in the past.

For example, GBP/USD has established a resistance level at approximately 1.5700. In other words, EURUSD has risen up to 1.5690 repeatedly, but has been unable to move above that point:

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What is Technical Analysis

Technical Analysis is probably the most common and successful means of making trading decisions and analyzing forex and commodities markets. Technical analysis differs from fundamental analysis in that technical analysis is applied only to the price action of the market, ignoring fundamental factors.  As fundamental data can often provide only a long-term or "delayed" forecast of exchange rate movements, technical analysis has become the primary tool with which to successfully trade shorter-term price movements, and to set stop loss and profit targets.Technical analysis consists primarily of a variety of technical studies, each of which can be interpreted to generate buy and sell signals or to predict market direction.  Please see our Technical page for a detailed description of these studies and their uses. 

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Live Currency Rates

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Technical Summary

Technical Expert Forex Training Powered by urduforextraining.com

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Economic Calender

Real Time Economic Calendar provided by urduforextraining.com.

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Urdu Forex Trend & Trend-lines Training Videos Expert Course

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Urdu Forex Trend & Trend-lines Training Videos Expert Course 

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Support and Resistance Level

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 Support and Resistance Level of Market

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Method of SMA Part-1

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SIMPLE MOVING AVERAGE

 

A simple, or arithmetic, moving average that is calculated by adding the closing price of the Currency pair  for a number of time periods and then dividing this total by the number of time periods. Short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react.

In other words, this is the average Currency price over a certain period of time. Keep in mind that equal weighting is given to each daily price. 

As shown in the chart above, many traders watch for short-term averages to cross above longer-term averages to signal the beginning of an uptrend.

As shown by the blue arrows, short-term averages (e.g. 15-period SMA) act as levels of support when the price experiences a pullback. 

Support levels become stronger and more significant as the number of time periods used in the calculations increases.

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The Moving Average Part-3

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SIMPLE MOVING AVERAGE

HOW TO APPLY ON CHART

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The Moving Average Part-2

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The Moving Average

When you are getting on the highway, you know you are going to be moving with the trend, or flow, of traffic, but you have to determine when you are going to enter the flow of traffic.

Most highway entrances take care of this decision for us. We have to wait for a green light before we

can get on the highway. If we see a red light, we know it is not time to get on yet. Oscillating indicators work like the traffic light at the highway entrance. They tell us when potentially profitable opportunities arise so that we know it’s time to enter the market. 

As you've probably noticed by looking at the price trends in the charts, uptrend usually don’t just go straight up, and downtrends usually don’t just go straight down. They will move in one direction and then pull back in the opposite direction just a little bit before continuing on in the previous direction.

 These pullbacks are the ideal time to enter the trend, and oscillators help you identify when these pullbacks occur and when they are likely to turn back around.

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The Moving Average Part-1

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TECHNICAL ANALYSIS TOOL

THE MOVING AVERAGE

To identify the trend, we like to keep it simple. We use a moving average. If the moving average is pointing up, we know we are in an uptrend. If the moving average is pointing down, we are in a downtrend. It’s as simple as that. Here is an example of the EUR/USD price chart with a moving average added to it 

You can see how simple this analysis is. Whichever way the line is moving, that is the direction of the trend. Once we have identified the direction of the trend, we then have to determine at what point we want to jump into the trend because some times are better than others.

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Technical Indicator Part-2

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Technical Indicators

When you trade with the rest of the market, you exponentially increase your chance of success.

Everybody looked really smart because everybody was choosing winning investments. But our success wasn’t based on our genius; it was based on the trend. The trend in the market was going up, and everyone just rode the wave higher. We all kept buying more and more shares, but the value of our shares never seemed to go any higher. Most investors were baffled and ended up losing quite a bit of their money.

So what happened? Well, the trend reversed and started going down instead of up.  Now, there were certainly a great number of fundamental factors that affected the reversal of the trend, but all we care about in technical analysis is that the trend reversed

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Technical Indicator Part-1

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TECHNICAL INDICATORS

Technical indicators are the basic tools of technical analysis. Technical indicators classified into two categories: Trending and Non-trending (or oscillating, Flat) Technical analysis for us is a two-step process. First, we identify the current trend. 

Next, we sit back and wait until the market tells us it is a good time to jump in and take advantage of the current trend. The trend is the single most important piece of technical information you can have. Once you are able to identify the trend of the market, you are three-quarters of the way to a successful trade. When you trade with the rest of the market, you exponentially increase your chance of success.

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Technical analysis Part-3

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Determining market sentiment is very important when you are making your investment decisions, and technical analysis enables you to do so. There are times, however, when you are going to encounter/find  periods of indecision/ being unable to decide  in the Forex market, and you won’t be able to determine if sentiment is bullish or bearish toward a given currency compared to another.

Indecision is usually caused by too many impartial participants or a relatively even split between bearish traders and bullish ones. When this happens, the market will begin to trend sideways.

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Technical Analysis Part-2

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When a currency pair is going down on the chart in the Forex market, all it means is the quote currency is becoming more valuable than the base currency. So when you are talking about being bullish or bearish in the currency market, you have to take it one step further. You have to specify which currency in the currency pair you are referring to.

Figure 10.1

For example, the trend on the chart of the EUR/USD (see Figure 10.1) could be going down, but you could still say you are bullish on the U.S. dollar because, as the U.S. dollar gains strength, it pushes the trend for that pair down.

Figure 10.2

Now if you were looking at a currency pair in which the U.S. dollar was the base currency, such as the USD/JPY, the trend on the chart would have to be moving higher for you to say you are bullish on the U.S. dollar (see Figure 10.2).

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Technical Analysis Part-1

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Technical Analysis

Technical analysis tools help you identify market sentiment what the Forex market is doing and why. As Forex investors watch the markets, because their trading decisions are reflected in the price movement of the currency pairs. There are only two general market sentiments that you need to focus on in your trading: bearish and bullish. in the Forex market, they carry slightly different ideas.

In the stock market, “bullish” has a positive idea/market  because it means that the market is going up, and “bearish” has a negative idea/market because it means that the market is going down. This is not the case in the Forex market. When a currency pair is going up on the chart in the Forex market, all it means is the first currency in the pair the base currency is becoming more valuable than the second currency in the pair the quote currency.

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