What is Technical Analysis
Technical analysis forms a key part of the market.
There is no doubt that you will want to know where the price of the asset goes. Well, the answer can be found through looking at the live chart.
Even a novice trader can start to intently delve into the trading platform in search of patterns. Oddly enough, they really are there. Any chart is a kind of language that is akin to the one in which mathematicians communicate. A professor in any country can easily figure out parabolic images and universally written formulas.
Trend line is a basic indicator of technical analysis. Its main purpose is to determine (and emphasize) the present price direction.
To put this indicator on the chart, define at least two highest and two lowest points, then connect them with the Trend Line tool on the Realms FX platform.
Open the economic calendar at Realms FX and find major economic indicators with two or three exclamation marks. These are publications of statistical data that have the strongest influence on the currencies of the related countries.
Typically, traders pay attention to the difference between the actual value and the forecast. The more this difference the more volatility could occur on the price chart of a dependent asset. Most often, it is the national currency of that country the news is published.
More often, you will follow the US news (they are most understandable for beginners) and the focus of your attention will be on the dollar – USD. If the American statistics turns out to be good (better than analysts’ forecasts), then get ready that the EURUSD chart can go down: yes, the dollar rate, in this case, will increase but pay attention that it stands second in the pair. Accordingly, the price of the euro in dollars will fall.
Support and Resistance
Look here, we put two levels on the chart. Unlike the trend line, support (below) and resistance (above) are always horizontal. To build these levels by yourself, you need to determine the points where the constant price stop is regularly taking place.
The chart below displays the resistance level is an upper limit of the price channel, and the support level is its lower border.
When is it best to open a trade using support and resistance?
After the price has started moving from level to level, open a position after the first new candle formed from the border inside the range.
In this case, the trade should be closed even before the chart touches the opposite line, because the price may simply not reach it at all.
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