Technical analysis is the study of historical and graphical data so that traders can perform their operations more consciously.
Keep in mind that past performance is not always a reliable indicator of future performance.
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There are 3 basic types of trends:
- Short term
- Middle term
- Long-term
First, you need to define the type of negotiator / investor you are. You must decide whether you want to work for a long time or buy and sell quickly. This decision will determine the graphics to use. Day traders, or those who invest and leave their positions quickly, use daily and intraday charts more than investors who buy and hold for a long time.
Levels of support and resistance
A support level may be the previous minimum. The resistance level could be the highest point of the previous day, or better known as the maximum. After breaking a resistance level, it usually becomes a support level if the negotiated instrument falls again. When the instrument goes down and breaks the support, it becomes the new minimum. In other words, if the instrument floats above the resistance index, it becomes the new maxim.
Stroke
Plots are percentages. Throughout the day (open to markets), the instrument you observe or invest will normally trace the activity of the day before. It does not matter if it's high or low. The most commonly used is fifty percent. We also use levels of one third, 38% and 2/3.
Trend lines
The simplest way to begin your analysis is to learn and apply trend lines. The first thing to do is to draw a straight line that connects two points on your graph. To display an increasing trend line, connect two minimums on one line and, for a decreasing trend line, connect two maximums. You will notice that, generally, the market (price) will pull a trend line before resuming a trend. When the price exceeds a trend line, it's the end of a trend. The longer the trend line, the more it has been tested and the more important it is. Keep in mind that the trend line becomes valid when the market touches it 3 times.
Moving averages
When looking at buying and selling signals, you should look at moving averages. These stockings will tell you if the current trend is still at stake. Caution: do not plan a change of trend. Operators generally use two moving averages. Moves above and below 20- and 40-day averages are very popular. 5 and 20-day averages are very popular for those who trade quickly
Oscillators
In order to identify the conditions bought or sold in excess of the markets, oscillators are commonly used. They often alert an operator that the market has gone up or down too much and that a change is imminent. The relative strength index or RSI and stochastic are the most popular oscillators that an operator will use. Now, these scales range from 0 to 100. The RSI: if the scale is greater than 70, it means that it is too much bought. If the scale is less than 30, it is sold too much. For stochastics, excess purchases are 80 and 20 are sold in excess.
