Forex technical analysis


Basic rules of technical analysis Indonesia

For ease of use, the trading period from Monday to Friday is divided into equal intervals - timeframes. Thanks to them, it is possible to analyze the most critical parameters. They include opening/closing price, price minimum/maximum, volumes.

The basic rules of technical analysis are the basis of almost any trading strategy.

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The following unchanged postulates are taken as a basis:

  • Prices take into account everything. Any political or economic factor affects their change (sometimes climatic). 

  • Prices are subject to trends. The value of currencies is constantly changing. As a result, currency pairs are growing and falling in price. In certain periods there may be a flat - a time of uncertainty when the price does not change much over time.

  • History repeats itself. Trend reversal, flat market conditions are observed at the same price levels. Once a trend is noticed, it can be repeated many times, which traders use in trading systems.

Technical analysis of the Forex market usually comes down to determining the most appropriate time to join the market in order to "buy it cheaper, sell it higher" - it can be a search for the point of a trend reversal, to determine whether the direction of the current market is appropriate to enter the market, or, for example, to identify potential earning opportunities even during the flat period. 

Standard and non-standard timeframes

MetaTrader 4 terminal and its "senior" MT5 version offer several standard time intervals - from M1 (minute) to MN (month). The chart is divided into nine-time frames, in addition to the extreme ones M5, M15, M30, H1, H4, D1, W1 are used. The dynamics of the price changes depends on the choice of period. Short-term trading systems use time periods not longer than M30, while fans of short-term TCs do not fall below H1.

Sometimes traders resort to forming non-standard timeframes. Their task is to compensate for the disadvantages of standard values. If the indicator on H1 shows a late value, and on M30 it "hurries up". Presumably, "average value", i.e. M45 time frame should show the most accurate time for opening deals. The period range is changed due to the script called PeriodConverter built into MT4 and MT5.

Technical analysis tools

Periodical repetition of earlier events allows us to prepare for them and, having timely revealed the tendency to return to the previous positions, to earn the profit. There are a lot of instruments in a trader's arsenal: support/resistance levels, ascending and descending channels. The terminal has built-in functions for drawing the necessary lines on the chart of a foreign exchange pair, and access to them is available from the "Graphical tools" bar.

Also, instruments are offered:

  • Grid, fan, arcs, time zones, Fibonacci channel.

  • Grid, lines, Fibonacci channel.

  • Fourier row.

The listed trading "superstructures" are an attempt to mathematically predict the subsequent price movement based on the technical analysis of the previous market trend dynamics. The use of channel instruments allows trading at the moments of price reversal inside the channel, taking into account the current trend. Channel lines indicate where the correction reversal is most likely to occur if the price moves against the trend, support/resistance lines indicate the price level where a trend change is expected, the beginning of a protracted correction.

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All technical analysis tools are based on mathematical calculations that can give an averaged picture. Therefore, they are mainly used as a basis for determining the trend, and more precisely, the moment of entering the market is determined by indicators.