5 Advantage of Technical Analysis in Forex Trading

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5 Advantage of Technical Analysis in Forex
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Index

• Technical Analysis
• Scope of Technical Analysis
• 5 Advantages of Technical Analysis
• 1. Trend Analysis
• 2. Entry/Exit Point
• 3. Provides Early Signal
• 4. Quick and Less Expensive
• 5. Provides Lots of Information

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Technical Analysis

• Technical analysis includes the study of chart
  patterns, candlesticks, moving averages and
  indicators.
• It is easy to apply in any market in which the
  raw data (volume and prices) is available.

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• With the help of technical analysis, it is easy
  to understand the sentiments of the market and to
  forecast the prices, without looking at the
  fundamental factors of a particular currency.

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Scope of Technical Analysis
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The Scope of Technical Analysis

• Technical analysis is used by forex, equity, and
  commodity traders, to determine the short term as
  well as the long-term trends of the market.
• The scope of technical analysis is rising every
  day, as more and more people are trying to learn
  the skills of technical analysis to earn the good
  returns.

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5 Advantages of Technical Analysis
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1. Trend Analysis

• The biggest advantage of technical analysis is
  that it helps investors and traders predict the
  trend of the market.
• The uptrend, downtrend, and sideways moves of the
  market are easy to predict, with the help of
  chart analysis.

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2. Entry/Exit Point

• Timing plays an important role in investing and
  trading.
• With the help of technical analysis, traders and
  investors can predict the right time to enter and
  exit a trade thereby enabling good returns.

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• Chart patterns, moving averages, candlesticks,
  Elliot wave analysis, and other indicators are
  useful for traders to make entry and exit points.

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3. Provides Early Signal

• Technical analysis gives early signals and paints
  a picture of the psychology of investors and
  traders regarding what they are doing.
• The price volume analysis indicator the movement
  of market makers and the activities related to a
  particular market.

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• Another advantage of technical analysis is that
  it gives an early signal when it comes to the
  trend reversal.

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4. Quick and Less Expensive

• In currency trading, technical analysis is less
  expensive as compared to the fundamental analysis
  and there are so many companies that provide the
  free charting software.
• Technical analysis gives a quick result for
  traders who use 1 minute, 5 minutes, 30 minutes,
  and 1-hour charts.

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• For instance, the formation of a head and
  shoulder on 1 minute and 5 minutes chart gives
  the fast results, as compared to the daily chart.

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5. Provides Lots of Information

• Technical analysis helpful for the short-term
  trading, swing trading and long-term investing.
• Technical charts provide a lot of information
  that helps the traders and investors build the
  positions and take trades.

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• Information like chart pattern, support,
  resistance, the momentum of the market,
  volatility, and the traders psychology are some
  examples of types of information provided by the
  technical analysis and used by traders in the
  Forex market.

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Thank You