Introduction to technical analysis

Let's start with the assumptions underlying technical analysis . In this case I would take an extreme approach so that you can understand how a technical analysis used in obtaining the gain on trading . Of course in practice is not. You can combine both analysis ( fundamental and technical ) in order to obtain the best trading system for you .

The chartist ( those who perform technical analysis ) , believe that they can figure out the patterns of price movements in the exchange rate with the future exchange rate movements based on the observations in the past . In short they are holding this jargon : " History always repeats it self . " Philosophy is of course contrary to the fundamentalists in which investment decisions are based on economic fundamentals , monetary policy and the country concerned .

  
The main weapon of the technical analyst are charts ( charts - that's why they are called chartist ) . Through this chart they can see the ongoing trend , temporal trends , the volume of transactions and the psychological levels that exist . If you have been able to figure 4 it is , of course, a great advantage would soon be flowing into your pockets . Let me re :

1 . Ongoing trend

2 . volume of transactions

3 . Psychological levels ( support and resistance )

4 . The period of time that occurred .

Yup , that's it . Indeed, the goal of the chartist is predicting to four things . But now the question is how accurate our ability to predict the price ? Well that's what it must be constantly on the grindstone every day . There is no single perfect method of both fundamental and technical . Experience and self central role here .

Technical analysis itself has some basic section or a different analysis . Broadly speaking , technical analysis is divided into several major branches , namely :

Is technical analysis has weaknesses ? ? Of course . As I said just now , nothing is perfect . Let me sarikan second weakness of this analysis below :

Weakness in Fundamental Analysis

It takes time to obtain the information.

Often it is subjective because it involves a lot of opinions.

More suitable to be applied in the long term trading period.

Difficult to apply in an inefficient market.

Weakness in Technical Analysis

It requires a lot of data to support accurate prediction.

Relies heavily on the ability of chartist. Each chartist have different methods and each of them is not necessarily suitable to be applied to each other.

Well that's it for an introduction to technical analysis . In the next section we are directly acquainted with the chart . You definitely do not want too much information that ended up not making you dizzy ?