The core principles of technical analysis

Technical analysis is based on three core assumptions:

Market behavior contains all information: all factors that affect prices, such as economic data, political events, etc., will be reflected in price trends.

Price trend changes: Prices fluctuate along the direction of the trend, and once the trend is formed, it will continue for a period of time.

History will repeat itself: past price patterns and forms may reappear in the future, providing reference for traders.

Common technical analysis tools

Chart form: including head and shoulder top/bottom, double top/bottom, triangle shape, etc., reflecting changes in market sentiment and power balance.

Technical indicators: including moving averages (MA), relative strength indices (RSI), moving average convergence/divergence indicators (MACD), etc., providing quantitative buy and sell signals.

Trend Line: Connecting high or low points on a price chart to help identify trend direction and support/resistance levels.

Fibonacci retracement line: Use the Fibonacci sequence to predict the potential target level for price correction or rebound.

How to apply technical analysis

As a foreign exchange investment analyst, I recommend combining technical analysis with other analytical methods such as fundamental analysis.

Identify trading opportunities: Look for trading opportunities that match specific technical forms or indicators.

Set stop loss and take profit: Use support levels, resistance levels, or Fibonacci retracement lines to set stop loss and take profit levels and control risk.

Confirming Trends: Combining multiple technical indicators and chart shapes to determine trend direction and improve trading success rate.

Risk statement

Technical analysis is not omnipotent, and unexpected market fluctuations may occur. It is recommended that traders manage their risks, control their positions, and avoid excessive leverage.

Summary:

Mastering technical analysis proficiently is the key to the success of forex traders. Through continuous learning and practice, you can improve your ability to judge market trends and achieve long-term stable returns in the foreign exchange market.