Sharpen Forex Technical Analysis Skills

 Technical analysis in forex trading is an analytical method used to predict the direction of future price movements by studying price data in the previous period that has been formed and displayed on a chart. In this context, traders must at least understand the charts that are generally used in technical analysis first in order to know the price movements well.

How to Perform Technical Analysis in Forex Trading:

Get to know the current trend

See and recognize current trends. Starting from the long-term trend, then retreating to the mid-term or short-term trend. Although traders may choose which trend to take advantage of, it is advisable to look for a long-term trend (najor trend) and follow it. If the trader has recognized the trend, then the best trading strategy that the trader needs to have is to take a position (transaction) in the direction of the ongoing trend. If the trend at that time is up (uptrend), then traders should pursue buying opportunities. Conversely, if the current trend is down (downtrend), then look for selling opportunities.

Determine Support and Resistance Levels

In forex trading, this strategy is a boundary that connects the highs and lows of a price where traders can look for opportunities to buy in the support area or sell in the resistance area. If in the first step the trader takes a position in the direction of the trend and sees the current trend as an uptrend, then look for a long position in the support area, and vice versa.

Determine Stop Loss and Profit Target

In determining stop loss and profit targets, traders should not forget the risk reward ratio rule where the risk of loss should not be greater than the profit target. what is certain, the trader must determine how large the volume of transactions the trader does. If the trader suffers a loss, then the risk accepted does not exceed the risk tolerance that the trader accepts.

Things to Avoid in Technical Analysis

  • Never break the rules of the strategy that has been made.
  • Don't be in a hurry to make a transaction if there is no confirmed signal
  • Never use a trading strategy that you have not mastered or understood
  • Avoid using a strong trading strategy that is too complicated
  • Don't change strategy too often
  • Don't forget to limit the risk when trading, for example with a stop loss

More info:
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