What technical analysis looks at
Technical analysis studies past movements of price and trading volume to understand the current state of a market. Its core assumption is that price reflects the information in the market and the expectations of its participants. Past price moves offer no certainty about the future; technical analysis is a framework for thinking in probabilities.
Candlestick charts
On a candlestick chart, each candle shows the open, high, low and close for the chosen timeframe. The body covers the range between open and close, and the wicks show the extremes reached during the period. The same market can look very different on different timeframes, so it matters which one you are looking at.
Trend, support and resistance
Rising highs and lows point to an upward trend, and falling highs and lows to a downward one. Support is an area where falls have slowed in the past, and resistance an area where rises have slowed. These levels are zones rather than exact lines, and they can break.
Indicators
Indicators such as moving averages summarise price data with a formula to make movement easier to read. Because they are derived from price, indicators lag behind it. Using many indicators together can mean seeing the same information several times in different forms.
Limits
Technical analysis cannot anticipate sudden news or data releases, and such events can quickly invalidate patterns on a chart. Two people looking at the same chart can reach different conclusions. That is why technical analysis makes most sense as a tool used together with risk management.
Example: a support zone
Suppose, on a hypothetical chart, the price has fallen to around 1.0800 three times in recent weeks and turned back up each time. That area can be read as support, but it is equally possible for the price to fall through it on the next attempt. The numbers are for illustration only and are not a trading suggestion.
No chart pattern or indicator tells you the outcome of a trade in advance. Trading leveraged products carries a high level of risk, and you can lose all of the money you deposit.
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