Technical Analisys

Technical analysis is the analysis of price movement based on a mathematical calculation (formulas, graphs, charts, etc). By combining the movement of an instrument with mathematical formulas given, can provide a picture or a prediction of the future. Now you have to be careful watch ana analize the picture, The accuracy can not be 100% correct the accuracy is depend on how level of knowledge and distinct from each trader. The more you diligent studiying formula, evaluate, integrate, and so it will become more precise and accurate.


The purpose of the traders use technical analysis are to see :
1. Volume of transactions
2. Trend
3. Levels of psychological (support and resistance)
4. Period of time that happens.

Technical indicator was created by many technical analysts, and if collected can reach 250 more. With a variety of purposes. And with the different level of complexity. But for your information, you need not to use it all, just use what you really understand, a little better, simpler, but you master, know the strengths and weaknesses are better.

These indicators applying the principle of mathematical and statistical sciences. So the question is, well I should be a statistics expert then? The answer is not necessary, in the forex application programs, most of them have provided the facility that you apply directly on the graph. For those of you that already expert(forex & statistics) you can also make your customized indicators. Although this indicator may directly applied to graph, you still have to study the usefulness and function of these indicators.

Generally, there are 3 types of indicators are commonly used, they are :

1. Price Momentum Indicator (Oscillator):

This type of indicators used to identify oversold or overbought situation. Momentum indicators are also used to see if a trend were to continue or weakened. Type of related indicators:
- Stochastic Oscillator
- Relative Strength Index (RSI)
- CommodityChannel Index (CCI)

2. Trend Following Indicator:

This indicator is used to identify the beginning and end of a trend or when a trend will change in order to know the best time to open and close positions. Type of related indicators:
- Moving Average (MA)
- Moving Average Convergence - Divergence (MACD)
- Directional Movements Index (DMI)
- Parabolic SAR

3. Volatility Indicator:

This indicator is used to see market forces as seen from price fluctuations within a certain time period. The market is said to have high volatility if the price movement going up and down a sharp or highly volatile where there is a big difference in price between the highest and lowest prices. Type of related indicators:
- Bollinger Bands

The chosing name of technical indicators usually are the same as the name of its inventor. For example, an indicator called Bollinger Bands, created by John Bollinger, a jewish descent technical analyst .

Comparison tabel : Fundamental Analisys VS Technical Analisys

Fundamental Analisys	Technical Analisys
- It takes time to obtain information. - Very subjective because it involves a lot of people's opinions. - Difficult applied to an inefficient market.	- Require a lot of data to support the accuration of prediction. - Necessary skills trader(read and describing chart) - More suitable to aplly it in long term trading period.