Learn The Theory of Technical Analysis
The theory of technical analysis in Forex trading is based on the principle that you are able to use past market data, primarily price and volume, to predict future price movements. Through technical analysis, it is assumed that all information, whether public or private, is already reflected in the price of a currency pair. Through this approach, it is believed that by studying historical price charts and identifying patterns, trends, and various technical indicators, they can gain insights into future market behavior, a theory which contrasts with fundamental analysis, which focuses on economic factors like interest rates, inflation, and geopolitical events to predict currency movements.
At the real core of technical analysis is the idea of price action, which refers to the movement of a currency’s price over time. Technical analysts believe that prices move in trends—either up, down, or sideways—and that once a trend is established, it is likely to continue. This idea comes from the idea of market psychology, which asserts that human behavior, for instance, fear, greed and sentiment drives market movements. Through observation of price patterns and trends, technical analysts seek to anticipate future price changes based on the belief that history tends to repeat itself.
The Fundamental Principles
On this course, you will be taught everything about the fundamental principles of technical analysis and how this is the belief that price discounts everything, meaning that all factors, including economic data, news, and political events, are already incorporated into the current price of a currency. You’ll find out why technical analysts focus solely on price charts, rather than trying to interpret economic reports. What some of the most commonly used indicators for this are, what moving averages are, and how they can smooth out price data to identify trends.
In addition, you’ll learn that by using charts, patterns, and indicators, technical analysts aim to identify trends and potential reversal points in the market, relying on the notion that history repeats itself and that past price action is a reliable predictor of future movement. All of this and more as you start your course on the path to understanding everything about technical analysis on your journey through the world of Forex trading.
