Home Technical Analysis WHAT IS TECHNICAL ANALYSIS 101 ?

WHAT IS TECHNICAL ANALYSIS 101 ?

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WHAT IS TECHNICAL ANALYSIS ?
WHAT IS TECHNICAL ANALYSIS ?

WHAT IS TECHNICAL ANALYSIS?

The Technical Analysis method is the most used and trusted method by investors in order to predict the future price direction not only for Forex but also for all market analysis. Contrary to fundamental analysis, it can produce extremely objective interpretations, as it generally produces results with rational calculations and the evaluation of historical data.

Technical analysis assumes that prices continue on their way in completely interconnected movements as a whole. All price movements follow one another in a cycle, and essentially every current movement is a repetition of a development in history. The reaction to any effect in the ordinary conditions of the market is not different from the reaction that has occurred under a similar effect at any time before. Therefore, as long as every shape, every data on the price charts can be defined in a certain order and can be matched with any similar period in the past, it can be easier to make predictions. Because we know how prices reacted in a similar situation throughout history. We will likely get the same results, as the developing case also exhibits similar characteristics.

Technical analysis provides possible definitions for any piece of motion that can be scaled, expressed, fitted to a set of numbers, and compatible with mathematical facts. It uses many mathematically scalable tools, from the shapes created by the price graph to historical price averages, from comparing purchase-sell demand and prices to drawing auxiliary tools with very complex calculations. Since the results obtained are mostly expressed with exact figures, subjective interpretation is not required for the investor. The trader determines the right position point only by using the right techniques for the right instrument, comparing the instruments on price in a way that interacts with each other, and similarly by implementing techniques that will produce definite results.

Technical analysis starts with the ability to read charts. Reading the numbers that the price chart expresses in the horizontal and vertical planes is extremely easy as it contains the same features as any mathematical plane. Our “Graphic Types” section is designed to improve this basic skill. It is configured for you to define price expressions on the chart and get the basic reading skill at a glance. The ways of displaying the price movement in the chart and the issues related to its benefits were discussed.

The situation evaluations, which are formed by the price movements on the charts acting under certain assumed rules and can be shaped with the help of drawing tools, are explained in detail in the “Language of the Charts” section. The first step of technical analysis begins when the basic assumptions about the progress of prices begin to be tied to certain conditions with the help of drawings on the chart. Many expressive and graphable basic phenomena such as trend, support, resistance are explained by supporting with screenshots.

explained in detail in the section. The first step of technical analysis begins when the basic assumptions about the progress of prices begin to be tied to certain conditions with the help of drawings on the chart. Many expressive and graphable basic phenomena such as trend, support, resistance are explained by supporting with screenshots. In the indicator field named “Technical Analysis Indicators“, the most used indicator tools were shown on the graphs and their usage patterns were explained. In addition, information was given about the working methods and calculation methods of the indicators, and the user was provided with certain ideas. The indicator group is grouped under a separate heading on the trading platform and the selected indicator is easily added to the chart with a click of a button. The indicator added on the graph makes mathematical calculations about the historical data and describes it with visual tools. In this way, the investor has the chance to consider the objective values ​​while deciding the future by calculating the past period.

Technical Analysis Formations

In our “Technical Analysis Formations” section, the most known and used formation shapes are processed and explained together with visual elements. The formation of the candlesticks that make up the price movement, one after the other under a certain order, and their transformation into any known shape is called a formation. The fact that the prices visually form a certain shape can often be perceived as a message about the future. Because, in its historical behavior, it is known by experience how prices react in similar formations.

Contrary to numerical values, the formation group requires a perspective that requires imagination and experience for the investor. Comparing formations to a shape and drawing resemblance boundaries for the simulated shape emerges as a skill that develops better over time. Because trying to put the shapes into a known mold may lead to an evaluation that includes incorrect results for a shape that does not exist. Whether the formation resembles a formation or not, its evaluation may vary from person to person, as it may require a subjective point of view.

What is Fibonacci?

The last topic of our technical analysis section will be about ”Fibonacci”. Although it is not easy to fit the subject into lines, we tried to mention the use of Fibonacci in technical analysis in an understandable and fluent language. The theories of Fibonacci, who pioneered the development of European mathematics with his book Liber Abaci, published at the beginning of the 13th century, are used very effectively in financial markets today. Many tools, especially Fibonacci reversal rates, are designed according to the golden ratio concept described by Fibonacci and are thought to give successful results. In the relevant section, theories regarding the successful use of Fibonacci tools are discussed with visual elements.

Although technical analysis and fundamental analysis concepts are compared with each other and their advantages and disadvantages are discussed in most discussion platforms, it would not be wrong to say that they are essentially two methods that complement each other. Because, while it is necessary to determine the market direction and investment decision with basic analysis in some academic education resources, it is recommended to determine the entry points to the transaction with the technical analysis method. However, it is not a wrong method to trade only with the technical analysis method. Moreover, investors who have no economic knowledge and enter the Forex and cryptocurrency markets just to evaluate their money can determine their strategies by producing results from the relationship of various technical analysis methods. This method is considered as a “fundamental analysis” method for investors who do not have economic knowledge.

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