Trend analysis depends on the past behavior of a currency in order to forecast the future price performance, it requires recognition of patterns, understanding of support and resistance and indicator interpretation.
In the trading community, the phrase “trend is your friend” is often heard.
Here are some important things to take when trading using technical analysis:
- Its primary advantage is flexibility. It can be used in analyzing different currency pairs and can be used across different market and timeframe.
- Trend analysis is merely a tool and not the only form of analysis a trader can use.
- Most technical traders also use a bit of fundamental analysis to identify a trading opportunity.
Since price is the result of market forces, technical analysis became one of the most significant tools used today.