Technical analysis is an important factor in making smart trading decisions, whether you’re trading forex, commodities, stocks or indices. Find out more about the tools and techniques you need to understand and analyse live charts so that you stand the best possible chance of succeeding in the markets.
There are 3 basic types of trends:
First, one must decide the type of trader/investor that they are. You must decide whether or not you hold positions for a long time or buy and sell fast. That decision will determine which charts you should be using. Day traders or those who invest in and out of positions fast will use daily and intraday charts more than investors who buy and hold for long period of times.
Support and Resistance Levels
A support level could be the previous low. The resistance level could be the previous day’s high point, or better known as a peak. After a resistance level has been broken, it will usually become a support level should the instrument you are trading declines again. When the instrument moves down and breaks the support, then this becomes the new low. Looking at it the other way if the instrument moves higher through the resistance level, this becomes the new high.