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In today’s episode, Dr. Jason Gospodarek lets us in on an important topic for everyone who’s into forex trading: Forex Technical Analysis. He discusses what technical analysis entails, as well as the different tools and know-how you need to get started.
What is Forex Technical Analysis?
Technical analysis is studying chart patterns that show up based on the past price action in the forex market. The time frame can vary: past minute, past hour, day, week, month, or even a year.
“Whatever you have, it’s looking at the past chart pattern.” – Dr. Jason Gospodarek
Different Chart Types
There are different types of charts that you can come across in the forex trading. There are bar charts, line charts, and candlestick charts.
Bar charts can be found in any platform used to trade forex with. A bar chart is a solid line with hash marks on the left and right sides. Used by some of the most sophisticated traders in the industry, bar charts represent the price range from high to low within a time frame.
Line charts are a more straightforward type, preferred by those who have done forex trading for a long time to see patterns. However, unlike bar charts, you can’t see the highs and the lows of incremental movements, just the average.
A personal favorite of Dr. Jason’s are the candlestick charts, through which he learned to trade forex when he first got started. You can set the color of the “bodies” of the candles, which show the opening and closing prices, usually darker when there’s downward movement and lighter when upward. The wicks at each end of the body also show the highest and lowest prices traded.
When using charts, however, it’s important to note that there are no fixed opening and closing trade times for different brokerages.
“Remember, different brokers in different platforms have different trade times.” – Dr. Jason Gospodarek
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