HOW TO predict the Future ? by studying the Past (Technical Analysis):
1) The best traders don’t discount one or the other but understand that having an understanding how the fundamentals influence market sentiment gives him/ her an edge over those traders who don’t.
3) “The number’s don’t lie” – all available information and its impact on the market, are already reflected in a currency’s price.
4) Prices move in trends – the foreign exchange market is mostly composed of trends and therefore a place where technical analysis can be very effective.
5) History repeats itself – over time, certain chart patterns become consistent, predictable and very reliable. The question is SEEING them.
PRICES MOVE IN TRENDS
Finding the prevailing trend will help you become aware of the overall market direction and offer you better visibility,especially when shorter-term movements tend to clutter the picture.
HOW does technical analysis help to determine what the trend is and HOW to trade with then trend versus against it?
It takes discipline and emotional control to stick with trading following through the inevitable market ups and downs. Keep in mind, good technical traders expect ups and downs.
Which technical indicators are the BEST?
NONE – technical indicators should simply be components of your overall customized, personalized trading system, and not a stand alone system.
The objectives as a FOREX Technical Trader are:
1) To figure out the price action of the currency pair. Price is the main concern. If the EUR/USD is at 1.2224 and goes to 1.2020, 1.1980, 1.1940- the market is in a down trend.
Despite what every technical indicator might predict, if the trend is down, stay with the trend. Indicators showing where price will go next or what it should be doing are useless.
A trader should only be concerned with what the market is doing, not what the market might do. The price tells you what the market is doing.
2) Always remember that technical indicators are only giving you confirmations based on what the market is telling you. So listen to the market and let it tell you which method, strategy or techniques you should use.