Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.


Top Five Benefits of Technical Analysis in Currency Trading

Recommended Posts

Technical analysis in Forex market involves the use of technical indicators and charts to predict price movements of a currency. Forex traders who use technical analysis in their trading have lauded it as very effective tool in currency trading. On the flip side, traders who use fundamental analysis believe technical analysis is a no go zone. Just like there are two sides of the coin, technical analysis has its benefits as well as its limitations. In this article, we are going to expound on the benefits of technical analysis in the Forex market.


Price Movement


Technical analysis usually focuses on the movement of prices of a currency in the market. Charts are used to show how prices are moving; when the prices are trending as well as strength of those trends. Oscillators, momentum and volume indicators give a clearer scenario of the market action. Using charts you can obtain price movements details at a glance. Unlike in fundamental analysis where the fundamentalists make use of economic reports, in technical analysis this does not apply. By analyzing the movement of prices of currencies in the market, a trader can easily make a well calculated buy or sell decision to maximize his margins.


Easy to Find Trends


Looking at a moving average for example, a trader can easily tell whether the price of the currency is trending or simply stuck in a range. Whether the currency is moving up, down or sideways, a chart will easily exhibit the trend. Trends are very important to technicians (technical analysts) because a currency has a tendency of moving in the direction of a particular trend. Using charts, it is easy to establish these trends and make an informed and wise decision in your trading.


Less Time Consuming


You do not have to perform complex mathematical operations when you are using technical analysis in trading of currencies. Internet has a rich wealth of various technical indicators that can be used by a trader to make huge profits from the market as well as reliable trades. Technical analysis is thus less time consuming as compared to fundamental analysis. It is also less tedious and cost effective.


Loads of Informative Data


Technical indicators and charts provide an array of information within few moments. First and foremost, using technical analysis trends can easily be found; volatility, momentum and trading patterns easily and quickly found. There is a host of indicators in Forex market and each provides information on various aspects of currency movement. This information is of paramount importance to traders to make substantial and profitable trades.


Easy to Identify Patterns in the Market


Actions in the market tend to unmistakably and clearly repeat themselves. Using charts enables a trader whether newbie or advanced to find patterns that will help him predict price movements. Like star constellations, patterns in the currency trading can be complicated and complex but with time it becomes easier when you master the art. Some of the patterns that are commonly used in Forex market are rounding tops and bottoms, head and shoulders, double and triple tops and ascending and descending triangles. These are proven patterns that currency prices usually follows. They have very strong predictive powers in the market.


Charts essentially tell a story about the price movement of a currency. The story can be complex with various plots and twists. On the other hand, the story can be simple with only few characters and a single narrative. Technical indicators and charts can give just basic information on support and resistance or trend. They can also give deeper information on how momentum is building, strength of a trend and whether the market is developing in a favorable way for trading.


Technical analysis can make a difference between substantial and profitable trades and loss making ventures. Use them effectively and you will enjoy good tidings all year round.



Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Topics

  • Posts

    • EURJPY Weakens On Price Sell-off With Eyes On 123.65 Zone EURJPY weakens on price sell-off following as it holds on its nearer term bear pressure. Support comes in at the 124.00 level where a break if seen will aim at the 123.50 level. A cut through here will turn focus to the 123.00 level and possibly lower towards the 122.50 level. Its daily RSI is bearish and pointing lower suggesting further weakness. On the upside, resistance resides at the 124.50 level. Further out, we envisage a possible move towards the 125.00 level. Further out, resistance resides at the 125.50 level with a turn above here aiming at the 126.00 level. On the whole, EURJPY retains downside nearer term.  
    • $WDAY (WDAY) Workday stock narrow range breakout watch above 199.31,analysis https://stockconsultant.com/?WDAY
    • Date : 25th April 2019. MACRO EVENTS & NEWS OF 25th April 2019.FX News Today The BoJ left rates unchanged, but clarified its forward guidance, saying it will keep rates very low at least through spring of next year. Also, they will expand the eligible collateral and also consider the introduction of an Exchange-Traded Fund (ETF) lending facility, that would allow to temporarily lend ETFs that the Bank holds to market participants. Japanese stock markets outperformed going into the announcement, but mainland China indices were under pressure. Stock futures are moving higher in Europe and the US. The weaker than expected Ifo reading yesterday and a negative GDP print from South Korea overnight added to concerns about the outlook for world growth, which means rates will stay low for longer. The Swedish Riksbank is widely expected to keep monetary policy on hold today. The front end WTI future is trading at USD 65.91 per barrel. Charts of the Day   Technician’s Corner USDCHF is consolidating since last night within 1.01970-1.02190 range. However, the pair still holds above 1.0200, suggesting the continuation of the uptrend, as the pair remains well above the medium term Support at 1.0123 level (6 month Resistance converted to Support). Intraday, however, and as momentum indicators have been flattened, consolidation mode could possibly hold within the day. A cross below 1.0200 could retest yesterday’s lows. AUDUSD within the strong 3-year Support, 0.7000-0.7020. It could react as a retracement level for the asset. However, the 3 black crows in the daily chart suggest that negative bias is increasing for AUDUSD. Main Macro Events Today Durable Goods (USD, GMT 12:30) – March durable goods orders are expected to rise 0.2%, following a 1.6% February decline. Shipments are expected to fall 1.5% in March, after a 0.2% reading in February. NZ Trade Balance (NZD, GMT 22:45) – The trade report is expected to show an improvement in the surplus to NZ$300 mln in March from NZ$12 mln in February. Tokyo CPI and Production Data (JPY, GMT 23:30) – The country’s main leading indicator of inflation is expected to have remained at 1.1% y/y in April. Industrial Production is expected to have improved, growing by 0.6% m/m in March, compared to -1.1% m/m in February, while Retail Sales are expected to have increased by 1.2% y/y, compared to 0.6% in March. Support and Resistance  Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Great News: - starting from today minimum deposit is ONLY 10$ (use ENTER10 code) - Deposit using Cryptocurrencies or Fiat Money (12 Cryptocurrencies + Credit / Debit Cards, Bank Transfer & Many eWallets options) 50$ No Deposit Bonus STILL Available & Daily 250$ Free Entry Trading Tournament USA Customers Welcome https://binaryoptionsprofits.eu/review/pocket-option/ Make up to 128% Profit / Trade Every 60 Seconds!
    • $SPY (SPY) S&P 500 ETF top of range breakout watch above 294.92,analysis https://stockconsultant.com/?SPY
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.