Technical Analysis

Technical analysis is the study of the behaviour of the market, using indicators, graphs and reports in order to best speculate on future trends of an asset price. The three basic assumptions in technical analysis are that: prices move in trends, history repeats itself and the price of an asset reflects its stability.

  • Asset prices move in trends: this is the understanding that prices always move in certain trends depending on the circumstances that occur every moment in the market. Using technical analysis, you can define the trends and find the assets you wish to trade.
  • History repeats itself: this is the belief that specific market trends reoccur repetitively. By examining and comparing the past behaviour of an asset, it can help you decide what to do with that asset depending on its historical movements.
  • The price reflecting the overall stability of the asset: Many elements can affect the market and reflect in share prices. Supply and demand have a major affect causing asset prices to rise or fall. Using technical analysis, you examine the consequences, and not the factors which caused the change in price.

Traders who choose to employ technical analysis, believe that price fluctuations are never random, and the reason can be identified using the proper strategy. Traders can also use technical indicators in their trading methodology, including popular indicators like the RSI (relative strength index), Moving average, and Fibonacci retracements.

Using technical analysis, traders use the market trends to predict the movements of specific assets in the future by finding patterns in the price changes and therefore helping to speculate on the future. Technical analysis gives traders an indication of the downward or upward trend in the price of an asset and allows them build a strategy. It’s also important to note that technical analysis is performed the same no matter what underlying asset you are looking at.

Risk Disclaimer

Trading in Forex and/or CFD and/or any other financial instruments involves significant risk and may not be suitable for all investors. Trading in the financial markets may lead to a loss of some or all your original investments, and as such, you should not invest money that you cannot afford to lose. Trading on margin/leverage can work against you as well as for you. You should be fully aware of all risks involved in trading. You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience, and knowledge before deciding to trade. Please read and ensure you fully understand our Risk Policy. Cryptocurrency trading requires knowledge of cryptocurrency markets and comes with several risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. Investors should conduct extensive research into the legitimacy of each cryptocurrency before investing.

*All trading involves risk. It is possible to lose all your capital.

© 2022. All rights reserved