The Basic Concepts of Forex Technical Analysis

For making technical analysis in Forex market, traders should understand and use such terms as trend, channel, support and resistance levels. Using the information obtained from the charts, it is possible to identify the best moments for the position entry and exit, recognize and predict when there will be trend fracture or its continuation in time.

Fibonacci levels are considered to be important and effective tools of technical analysis for determining the possible levels of trend reversal. By taking them into account the trader can determine the strong support and resistance levels, as well as the possible targets of correction and continuation trends.

One of the basic concepts of technical analysis is the trend. It is based on assumption that market participants make decisions in herds making asset price movements sustainable for some time.

In technical analysis the lows and highs of the trend are identified by their appropriate names, which are support and resistance levels respectively. These levels are the areas where most traders are willing either to buy or sell an asset.

Channel is one of key notions of technical analysis. It is defined as a sustainable corridor of price fluctuations with a roughly constant width.

Practicing Now