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Technical analysis

This is the simplest and most popular method for predicting price movements on financial markets. Based on past price behaviour, instruments of technical analysis help to identify current trends and show in which direction prices are likely to move in the future. In contrast to fundamental analysis, you don't need to analyse large amounts of information on your own!

The main principles behind technical analysis

  • The price accounts for everything

    All factors that could have an influence on the market are already factored into the price. All that's left for you to do is determine in which direction the price is currently moving.

  • Price movements fluctuate within certain ranges (trends)

    Having identified the current market trend, you can keep track of it while trading.

  • History always repeats itself

    The price's reaction to certain market conditions is often the same. By identifying historical patterns, you can yield some excellent results in your future trading.

Advantages of technical analysis

  • No special knowledge required

    Understanding technical analysis and starting to use it in your work is very easy. The simple and easily-accessible instruments are easy to understand even for beginners.

  • Accessibility

    Everything you need to conduct technical analysis is available in your MetaTrader platform.

  • Universality

    You can apply the same method of technical analysis to any financial instrument.

How to apply technical analysis

Graphics

In your trading terminal, you can draw trend lines, supports and resistances, channels, and other various figures, which can be used on any chart in order to predict future price movements.

Technical indicators

In the MetaTrader platform, you'll find 30 built-in technical indicators, which can advise you on the ideal time to open or close a position. There are also more than a thousand additional indicators and Expert Advisors available from a free online library.

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Special analytical services

To make your work more effective, you can use the analytical services available in the MetaTrader terminal or access them right from your browser.

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How technical analysis is used

Technical analysis focuses not on the price of an instrument, but on the price's dynamics (trend), which can give us more complete information about a currency pair's movements. In performing technical analysis, the task of a trader is to identify patterns in price movements, and on the basis of their findings, to predict how markets will behave further. To help with this, traders have indicators, oscillators, key levels, and many other tools at their disposal.

Types of technical analysis

Technical analysis can be broken down into several categories. As a rule, beginners tend to stick to indicator strategies, which are simple to use and give out unambiguous signals. One popular method of technical analysis is candlestick patterns. This can help people trade not only in the direction of the trend, but also on reversals. Japanese candlesticks help with this by showing the price range within which an instrument has traded over a cetain period of time. The most widespread form of technical analysis is chart analysis, which is based on identifying support and resistance levels as well as trend lines. Charts vary in function and period. For example, weekly charts are useful for identifying the general direction of the trend, while the 4-hour timeframe is good for showing the price action currently taking place.

Programs for technical analysis

You don't need to be an expert in mathematics and ecnonmics to use technical analysis. There are programs that can do it for you automatically. One of these is Autochartist, which automatically identifies emerging patterns. This program tracks the dynamics of price changes on a chart and suggests the best direction in which to trade. You can use the Autochartist web-app or install it in your trading terminal free of charge.

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