- Instructor: Mike Hussy
- Lectures: 2
- Duration: 6 weeks
Technical analysis is the study of past patterns of price action in an attempt to determine a likely outcome of the future price move. Those studying the technical analysis are called Technical Analysts or Technicians. These analysts are not concerned with the intrinsic value of one currency as compared to another, but focus on the study of market movements only.
Technical analysis is based on the theory that the markets are chaotic but at the same time, price action is not entirely random. In other words, mathematical Chaos Theory proves that within a state of chaos, there are identifiable patterns that tend to repeat.
This type of chaotic behavior is observed in nature in the form of weather forecasts. For example, most traders will admit that there are no certainties when it comes to predicting exact price movements.
As a result, successful trading is not about being right or wrong: it’s all about determining probabilities and taking trades when the odds are in your favor. Part of deciding chances involves forecasting market direction, and when/where to enter into a position, but equally important is determining your risk-to-reward ratio.
Well, that is the complicated explanation; in reality, technical analysis is anything and everything we do with charts. It could be simply called chart analysis.