What is technical analysis?

In the financial markets, there are two main methods of market analysis. Both these methods are employed by traders in order to analyse price movements and make wise investments.

These two methods are known as Technical Analysis and Fundamental Analysis.

The main difference between the two schools of thought is their approach towards their analysis of the market. To determine the future activity of an asset or commodity, technical analysis studies its historical performance, focusing on its price movements in the market. Conversely, fundamental analysis concentrates primarily on external factors that include economic, geopolitical and social conditions, and how these affect or could affect the price of an asset.

In this section, we will look at the basics of technical analysis in more detail, examine the importance of chart patterns, moving averages and indicators, and show how you can use technical analysis to improve your trading style.

Did you know?

The GBP/USD pair is widely referred to as “cable”. The term dates back to the 19th century, during which the exchange rate between the U.S. dollar and the British Pound was transmitted across the Atlantic via a huge cable that ran across the ocean floor and connected the two countries.

Word of the day
"Rectangle" - A chart formation that indicates trend continuation.
Pro Tip

Pips are important because they determine your profits or losses.

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