STRATEGIES OF FOREX: TECHNICAL ANALYSIS

STRATEGIES OF FOREX: TECHNICAL ANALYSIS.

There exist two principal strategies of Forex, from which others divide many: there are the technical analysis and the fundamental analysis.

The technical analysis is a strategy of Forex that basically is based on the analysis of the flow of the market from historical bosses, using as basic hardware the lines of support and of resistance of the flow of the currencies.

The fundamental analysis is a strategy of Forex that is based in bearing in mind the different factors that influence on the market FOREX, as there are the important news, the events and other facts that do that a currency depreciates or his value increases. This is the analysis of the factors that influence on the market.

Both strategies of Forex are extremely successful depending on the mentality and style of the investor. None of the two can say to herself that it should be better that other one, but each of them has his strong points and his concrete moments in which it is more suitable. For example, the strategy of fundamental analysis is more suitable when the market is volatile and unpredictable, also it is usually more suitable when long-term strategies are carried out. On the other hand, the technical analysis is especially suitable on stable markets and in short-term investments.

In this article we are going to speak on the strategy of Forex called Technical Analysis. He is going to explain himself in general of that it consists and there are going to touch some general points that the investor must have to know to invest with this one Forex strategy.

TECHNICAL ANALYSIS.

The technical analysis is a strategy of Forex that bases his decisions and measurements on the analysis of graphs and indicators that take the history of a currency as a boss in a certain time period to do predictions of the tendencies that divided happiness has in the future. This is, it takes patterns of the past to determine tendencies of the future.

For it, the strategies of Forex of technical analysis are based on instruments like the mathematics, the statistics and the logic, from the definitely instrumental point of view.

From the point of view of the observation and the analysis, the strategy of technical analysis what it does is to determine, making use of the tendencies and psychological patterns in mass that there have the investors of the market, which is going to be the joint psychological tendency that is going to mark the direction that is going to take the currency in the future. This way, from the psychological point of view two vital mental states are going to exist to determine the tendencies of the market: the fear and the greed. This way, when there is fear the people do not want to keep on investing in a currency and therefore this one stops increasing his price, if there is greed the fact is that the currency will increase his price because they invest all.

This one Forex strategy arises from the combination of the mathematics (and his related sciences, like the statistics and the logic) with the historical and psychological observation of the behavior of the market. From the historical and psychological observation there departs the information that they will allow to the analyst to decide with regard to the investments, and the mathematics will automate all this information, will process them and will say the important points where the investment alarm goes off and the possibility of investing must be born in mind.

It is necessary to warn that this Forex strategy is especially useful for short-term investments, so with her bosses are identified in a certain period of time. The investments with this strategy can be from periods of time from 5 minutes until weeks. Nevertheless, it is necessary to bear in mind that while longer the period they will need to bear in mind more mathematical information and, also, the tendencies will be subject to external factors that can be out of the control of the technical analysis, as there it are the tall volatibilidad, important and extraordinary events on the market that mark a tendency without precedents, etc.

An advantage of this one Forex strategy is that it does not depend of that there are events on the market to be able to operate. In any moment it is possible to try an operation with this strategy since at all times the information is present to do it, it is necessary only to wait to detect a boss or a sign that it indicates that the investment can be done.

Everything previous generalities are as to introduce us in what means the strategy called technical analysis. Since it can already be deduced, this one Forex strategy can imply many hardware, called indicators. For this strategy many indicators exist and each of them helps to determine different patterns and gives different useful information. Further on some of the most important hope to be able to do an article that he explains in detail. For the time being we will only give them a list of those who are considered to be more important owing for the time being the detailed explanation to them.

More important indicators:

- levels of Regression of Fibonacci

- oscillators

- analysis of Japanese Sails or “Candlestick“.

- bands of Bollinger.


They have left owing the explanation of each of them, and the team of invertirforex wishes them a lot of luck in the study and in the investments.

Related articles:

Introduction completes to the Technical Analysis.



To return to Forex, Development.

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