Technical Analysis is the study of price action (charts). It has been used in the west for approximately 100 years, while in Japan it has been in use for over 300. Price action it is said to depict the battle between the Bulls and Bears. The Bulls pushing the market up with their horns, the Bears pulling the market down with their paws. When looked at over a period of time one can identify if investors have been buying or selling an instrument (trend), price levels where investor confidence has waned (supply/demand) and areas to buy or sell (Entries/Exits). These are our 3 Technical Analysis objectives. 1. Identifying Direction (trend). 2. Identifying Overbought/sold areas (suppy&demand). 3. Identifying Entries/Exits. This in essence, is all trading is! If you get the direction wrong, are not aware of potentially weak areas in price and don't know when to buy or sell, you're going to lose money! NB although It’s important to understand the concepts of bullish and bearish I prefer not to view the marketplace as a battle ground. The market is one entity not some schizophrenic beast, to me the market is human (as it’s made up of humans) and price action represents its/our overriding emotion. Be it optimism (up), indecision (choppy) or pessimism (down).
No comments:
Post a Comment