There comes a time when a person begins to think how to multiply free resources to make him better. He checks what the financial market offers him. In the end, it goes to the cryptocurrency / Forex market and begins to sink into the subject. He learns that there is technical and fundamental analysis, that the first one does not work, but those who say from it began. At the end he makes decisions that he will also start with the study of analysis to reach such a level that he will not need it.
The first question that comes to mind is what is technical and fundamental analysis, and what is with it.
Technical analysis - commonly referred to as AT is a study of market behavior through charts. Based on these results, the person using AT tries to predict future price trends. In short, the price and volume study is to predict future price changes.
Knowing this technique, we try to answer the questions When to buy? When to sell? What happens on the chart? How far and in what direction will the price go?
Fundamental Analysis - commonly referred to as AF, examines the condition of financial companies and helps to determine goodwill. Thanks to this, it can be determined if the company is undervalued or overvalued.
The father of modern technical analysis is Charles Dow, the founder of Dow Jones & Company (1882). Here, you should search a little more about it on the Internet (https://pl.wikipedia.org/wiki/Charles_Dow). AT has several assumptions:
- The market uses everything so that the price reflects changes in the relationship between supply and demand which are affected by fundamental and political factors, market moods, etc.
- Prices are subject to trends that are moving in a certain direction over a certain period of time. AT is trying to show the likelihood of a trend continuing or changing
- History repeats itself. Thanks to research of historical data and behavior of investors in given situations, AT shows certain patterns or patterns that are repeated at different times. On this basis, we can forecast a further price direction.
Technical Analysis has tools to help us find important price turning points. They can be divided into such categories as:
- Charts (linear, candlestick, bar)
- Japanese candle formations (trend reversal, trend continuation)
- Indicators and oscillators (trend, volatility, momentum, market strength, support and resistance indicators)
- Theories of Elliot and Gann waves, Fibonacci levels etc.