Technical analysis is a method used by traders to determine whether they should trade and how to go about it. Through the use of technical analysis (TA), traders try to find an ‘entry’ (the right moment to enter a trade) and extrapolate its course of development. TA isn’t something that can be taught overnight since it’s mostly a matter of learning by doing, and most likely making some mistakes. There are no guarantees when using TA and it should only be used as a tool to gain more insight when trading. Technical analysis is often used for short term trading while FA (fundamental analysis) is mostly used for long term trades.
Technical analysis is actually a technique based on the fundamentals of mass psychology; many patterns are linked to human behavior. In this beginner’s guide we’ll tell you about market cycles, which indicators are used, and the types of patterns that can be seen in charts. Since substantial and valid TA is too big of a subject to handle briefly, this article should be viewed as an introduction to technical analysis. It should not function as trading advice.