1.) Graph trends and price markets
Use long-term charts to choose between market trends or fluctuations. The analysis begins with daily, weekly, monthly and even graphs that are traced over the previous few years. The large-scale chart essentially shows the life of the market and gives a much clearer picture of the long-term perception of the market.
Once you’ve made a long-term joint, you can make several short-term schedules. Remember that the odds on Forex are much higher compared to the shorter terms on the chart. It is better to trade in the same direction as the trend in the medium and long term, even if it only works in the very short term. If there is a strong and definite trend, it is necessary to move to other types of strategies.
2.) Follow the trend
Once established you only need to open positions in the direction of the trend. Market trends can be long-term, medium-term or short-term. First you need to decide which strategy you want to follow: long term or shorter term. This is the decision to determine the type of charts to be used. But the strategy will always follow the trend.
If there is an upward trend, a regression of the purchase price of the pair is expected to ensure a good entry price. In the event of a downward trend, wait for the price to recover before selling coins. Market trends can be long-term, medium-term or short-term.
3.) Search for support and resistance levels
Find support and resistance levels. It is best to buy near the support level and sell near the resistance level. The resistance level is usually a peak above the previous maximum. When the resistance is finally broken, it automatically becomes a support. Similarly, when a prop is finally defeated, it in turn becomes a resistance.
4.) Retreats and corrections
Typically, market correction, up or down, is a significant part of the previous trend. Amendments can be measured in an existing trend in simple percentages. A fifty percent trail above the trend is the most common. 38% and 62% Fibonacci processes are also two of the highest levels followed by Forex investors, including major players such as banks or financial institutions.
5.) Trending lines
One of the simplest and most effective charting tools is trend lines. Draw a straight line on the graph that connects the two points. If the trend is ascending, a line connecting two or lower points is drawn below.
When the trend declines, a line is drawn on the chart that also connects the two or higher points. Prices often respect these trend lines when approaching them. If the trend line is broken, it often indicates a change in the main flow.
6.) moving averages
Moving averages often give signals to buy and sell, so it’s important to keep that in mind. With the help of moving averages you can determine the state of the current trend.
One of the most common ways to use moving averages is to use two different averages in one chart and wait for the averages to intersect. If, for example, we tend to rise and prices have been in correction, at a time when the faster moving average (e.g., 10-day) goes above the slower moving average (e.g., 20 days), it’s probably a good buy.
They help us identify markets or overbought. Although moving averages confirm the market trend, oscillators can often tell the right time to open a trade.
The two most common oscillators are the Relative Strength Index (RSI) and the Stochastic. Two oscillators operate on a scale from 0 to 100. If the RSI exceeds 70, the effect of the purchase occurs, and if it is below 30, it indicates the inadmissibility of the reservation. The values of stochastic overbought / oversold are 80 and 20.
One of the most useful signals given by oscillators is the known discrepancies. Divergence occurs when the direction of the generator signal is different from the direction of the same price. Such situations are usually strong evidence of a changing market trend.
8.) moving average convergence-divergence
Moving Average Convergence-Divergence (MACD) combines a moving average crossing with a generator that repurchases / resells moving parts. A buy signal occurs when a faster line crosses above a slower line, both below zero.
Conversely, a sell signal occurs when a faster line crosses below a slow line, both above zero.
The MACD histogram identifies the difference between the two lines and gives an early warning of changes in the trend. This is called a bar chart and uses vertical bars to show the difference between two lines.
9.) Average directional motion index
The average directional movement index (ADX) helps determine whether a market is trending or fluctuating between ranges. This tool measures the strength of a trend or direction of the market, but does not show the direction. To do this, use other indicators or tools. As a rule, readings above 25 are evidence that the market is in strong dynamics, but fluctuates in the range.
10.) Further training
Training in technical analysis is very important for every investor. Only you can improve and refine the practice and experience in this market. Continue reading and learning is very important to find successful forex strategies that work best for you. If you are new to forex trading, you can find basic strategies for beginners online.
Remember, trading based on technical analysis also helps us focus on our goals and prevents forex trading solely on emotions and impulses. Discipline is necessary to succeed through your forex strategies.