What is Technical Analysis?
The Technical Analysis is the term that evaluates the trade by analyzing the price action of the currency pair in order to identify the patterns to observe the market movements.
In Technical analysis you will need to read the charts levels with the Elliot wave theory, Candlestick Charts, Moving Average Convergence, and divergence (MACD). This will represent the visual approach to market analysis.
Pros and Cons of Technical Analysis
Pros of Technical Analysis
- Technical analysis helps traders to predict the trend of market either market is having uptrend, downtrend or side trend.
- Timing is an important aspect of trading and investing, when to open a trade and when to close a trade to gain good returns. The charts levels with the Elliot wave theory, Candlestick Charts, Moving Average Convergence, and divergence (MACD) are helpful to make entry and exit points.
- Technical Analysis gives an early signal to traders when it comes to Trend Reversal.
- Technical Analysis is helpful in short term analysis.
- Traders should use a range of indicators and analysis tools to get the highest level of assurance possible, and have a risk management strategy in place to protect against adverse movements.
Cons of Technical Analysis
- At some points trading indicators gives a mixed signal means one indicator will show a buy signal while other one will show sell signal so investors are not being able to identify the signals for price trends in a market.
- Technical analysis is used to forecast the prices of trading instruments. However during the volatility the accuracy is not 100% and prices can increase or decrease after entry or exit points.