Technical Analysis Plan
Conducting technical analysis requires a specially designed action plan that will help maintain
consistency and increase the efficiency of the process.
A properly drawn up plan is the basis for preparing for trading. Methodological literature mainly describes the methods and techniques of various types of market analysis, but how to apply the acquired knowledge in practice remains unattended.
The technical analysis plan for Forex depends on the specific method of studying the market that you have chosen for your trading strategy, but there are still common components in any of the plans.
In the same case, if your strategy involves concluding long-term transactions, you will need to study a longer time period of several days or even weeks.
2. Objectives – we determine what we need to find out during the analysis process, simply determine the direction of the trend or obtain complete information characterizing the situation on the Forex market.
You should not set an excessively wide range of tasks, as this will significantly increase the time spent on analysis and the obtained data may simply lose relevance. 3. Tools and tools - after you have decided what you need to find out, we move on to preparing the practical part. We build the necessary levels or lines, install technical analysis indicators or perform other actions.
To speed up the process, it is recommended to use special indicators whenever possible; this significantly reduces the time for analysis and increases its accuracy.
4. Evaluating the information received is, in fact, the final stage at which you evaluate all the data received and draw conclusions about the current state of the market.
After this, you can proceed to making forecasts and directly opening new transactions. An example of a technical analysis plan.
It is possible to better understand all of the above only with a specific example; in our case, we will try to analyze the trend for trading using a channel strategy.
1. Trading will be carried out on the half-hour time frame M30, which means we analyze the half-hour time period.
For additional information, it would also be a good idea to study H1 and H4. 2. Our task is to find a better entry point into the market and build support and resistance lines.
3. We make the construction using a special channel indicator; it independently draws the necessary lines depending on the time frame in question.
4. Using the resulting lines, we determine the magnitude of price fluctuations and the direction of the trend, as well as the most favorable entry time.
The analysis is carried out according to the general principle - the shorter your trading time period, the less time it should take you to carry out the analysis.