The Most Important Thing In Technical Analysis
Technical analysis is an approach to price analysis that studies market activity using historical price data, including price charts, that have occurred in the past, to predict and anticipate future price movements.
In this case, of course, technical analysis must have data and price charts. Historical data used in technical analysis includes information on opening prices, closing prices, highs, lows, and trading volume.
In technical analysis, there are many known indicators that function to tell when it is time to trade. The data is processed into various indicators, and presented in graphs along with price movement data. Here are some important things related to technical analysis that deserve attention, including:
Price and Volume Chart
There are 3 capital price charts used in trading, namely line charts, bar charts, and candlestick charts. Among the 3 types of graphs. Apart from the price chart, it is also important to pay attention to the trading volume. Trading volume can identify the level of liquidity, and how volatile the instrument is, and how volatile the instrument is traded by market participants. By paying close attention to price and volume charts, traders will find some of the same patterns that always occur in every trade. The chart pattern itself is divided into two, namely:
- Chart pattern per bar
For short term trading. Examples of this pattern include the doji pattern, hammer, morning star and others
- Longer chart patterns
For the longer term. Examples of this pattern include cup and handle, head and shoulder, and others
Trends and Indicators
The next thing to note is trends and indicators, as traders know that the current trend is like the seasons of the weather, while indicators can be likened to signs that show the direction of the weather.
In its application, the use of technical analysis always uses various indicators. This indicator functions as a marker of an ongoing pattern or trend, as well as a buying and selling signal, as well as seeing signs of certain types of weather. The existence of this indicator allows traders to get a more complex picture. It is hoped that with the indicators that complement the chart, a perspective or prediction will emerge in the analysis. Traders can also make trading decisions.
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