Stages of technical analysis of the Forex market.

Technical analysis of the Forex market refers to the study of the dynamics of exchange rate movements. That is why quote charts for previous trading periods (time frames) are used as its main tool.

For analysis, graphs with time periods from five minutes to several years are used. It should be noted that on charts with long periods there is much less “market noise”, that is, false movements.

Therefore, the lines of the prevailing trend, the main graphic figures, as well as support/resistance levels are clearly visible on them. This allows you to make a relatively objective forecast of the most likely direction of movement of currency quotes. Experts in the field of trading on the global Forex market recommend conducting technical analysis every week before the start of the next five-day trading period. At the same time, they divide the process of such analysis into three stages.

1. Wave analysis of the market price movement of the currency pair selected for trading.

At this stage, the trader determines whether the price of the traded pair is currently in a corrective or impulse wave. If it is in a corrective wave, then which one – the second or the fourth? A graphical model of the correction's development is also determined. If the price is in an impulse wave, then which one is it in – the first, third, or fifth? The wave type is also determined, which can be simple or extended. It should be noted that accurately determining the current price position is the most important step in forecasting future price trends.

2. Graphic analysis of the price behavior of the traded currency pair.

At this stage, the Forex trader performs graphical constructions necessary to determine the most significant Forex levels - support/resistance, Murray, Fibonacci, and others, as well as to identify graphical patterns by which price movement develops - "descending and ascending triangles", "pennant", "wedge", "flag", "double and triple bottoms and tops", "head and shoulders", and so on.

3. Stage of market indicator signal analysis.

At the final stage of technical analysis, the trader takes readings of the market indicators used in a specific trading strategy ( Stochastic Oscillator , Accelerator Oscillator, MACD, Awesome Oscillator, Momentum, CCI, etc.), and also determines the behavior of moving average lines of different periods (Moving Average) relative to the price. The goal of the third stage of technical analysis is to confirm or refute the conclusions made in the previous stages Forex market indicator