The fundamentals of technical analysis are necessary to approximate the trade that is operated on the stock exchange. Thanks to these analyses, a technician will be able to identify a trend, invest or trade on the basis of the trend and make money, as the trend that develops indicates this.
Because technical analysis can be applied to different time frames, it is possible to observe both short-term and long-term trends. If you think you are ready to take the second step in this trade, we recommend that you do so with prestigious broker companies, such as: Plus500, eToro and AvaTrade.
Fundamental rules for Technical Analysis in Forex
In order to establish itself correctly in the stock market, it is worth considering the basic principles of technical analysis carried out in Forex, which are supported by tools, such as:
- Support lines: from here, that’s when brokers in Stock Exchange start buying.
- In other words, support lines are when the price stops to drop and has a limited stop time.
- Lines of resistance: this is the graphic line where you can see that prices stop rising and are faced with a period of pause.
- Trends: a trend is known when an average of variant prices is established over a limited period of time.
- This helps the dealer who wants to buy or sell a value, either up or down. Setbacks: setbacks indicate that a value is somehow unstable, as they fall from a certain price, and then return to their original point. For example, there are setbacks in the stock market that can occur at 30%, 40% and up to 50%.
- Channels: it is when two trends occur in parallel, in which traders can take advantage of them, either to buy securities when they are in a minimum trend, and sold when the values are in a maximum trend. Graphics: it is certainly one of the most useful tools in terms of technical analysis.
- The merchants use them to project the values in the market and, from it, anticipate the prices that will come in the future.
What are technical analyses?
Technical analysis is a tool well used by many investors who follow price behavior at a given time. Therefore, technical analysis can be a tool that passes information on how price behaves, how it is forming and at the same time shows active performance in particular in its different phases.
A graph can be presented in different ways, and can be seen at different times, whether monthly, weekly, daily or intraday. In the case of intraday, the investor has at his disposal the graph, either 60 minute, 30 minutes or less time. The chart time chosen by a person depends to a large extent on the availability of time an investor has to carry out its operations. A person who works in the short term logically chooses the intraday graph, while those who operate in the long term, in addition to having less time, choose a monthly graph.
Technical Analysis basics
These are some basics to take into account when marketing in Forex:
- If demand is higher than supply, the price must increase
- If demand is lower than supply, the price must fall By reversing this thinking, it is concluded that:
- If the price is rising, it is because demand is stronger than supply, so the fundamentals are high.
How to begin technical analysis?
The best way to start using technical analysis is to approach it as you would with any topic you wanted to learn more about and from your task. An increasing number of resources, including books and articles, are available in both print and electronic formats. Many websites offer educational content in the form of videos, seminars and chat rooms. You may want to start by learning about the different types of technical indicators, particularly those that measure; momentum, trend, volatility and volume. You don’t necessarily have to understand the mathematics behind the indicator (some of the calculations are quite advanced and complicated). However, it is a good idea to understand at least logic.
Once you have a basic knowledge of the different types of technical indicators, you can apply one of the indicators to track the evolution of the price of the asset of your choice. The average movement, for example, one of the most popular and versatile technical indicators, calculates the average price value of a value over a specified period of time.
The Spanish Stock Exchange is a good opportunity to market in the market. If you want to enter this market, you can test the technical indicators from the broker platform, such as: Plus500, eToro or AvaTrade. They are all specialists to make a comprehensive analysis of the market through the main indices such as the S&P 500, Dow Industrials, NASDAQ or NYSE. Everyone has a chance to enter the world market with a chance to make money.