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Forex technical analysis is a method of evaluating future currency price movements based on past market data, primarily price, and volume. Beginners can start by studying chart patterns, trendlines, and popular indicators such as Moving Averages, Bollinger Bands, and RSI. It is important to understand that technical analysis is not a guarantee of future market behavior, but rather a tool to aid in making informed trading decisions. It should also be used in conjunction with fundamental analysis, which considers economic and political factors that may impact currency prices.

Introduction

Forex technical analysis is a useful tool that traders employ to study and predict how the foreign exchange market will behave. It is a type of data analysis that focuses on the patterns and price movements of currency pairs and gives traders the knowledge they need to make wise choices. The study of price action, which includes looking at charts, trendlines, and other visual representations of price data, is the basis of forex technical analysis. Trades can be made by identifying trends in historical market data and forecasting the course of future price movements.

It is impossible to overestimate the role that technical analysis plays in forex trading. Most effective FX traders’ techniques include technical analysis heavily since it gives them the knowledge they need to make wise decisions and reduce risk. The capacity to swiftly and accurately assess market data is essential to success in the fast-paced world of currency trading.

Forex technical analysis is a complex field that requires a solid understanding of key concepts and terminology. For beginners, it is important to start by learning about chart patterns, trendlines, and popular indicators such as Moving Averages, Bollinger Bands, and RSI. Understanding these concepts is the foundation for successful forex technical analysis, allowing traders to quickly identify trends and make informed decisions about their trades.

Finally, technical analysis for the forex market is a crucial tool for traders who want to be successful in the foreign exchange market. It assists traders in reducing risk and maximizing profits by offering insightful information on the behavior of currency pairs. The knowledge of forex technical analysis is a crucial step toward success in the FX market, regardless of your level of experience.

What is Forex Technical Analysis?

Trading professionals utilize forex technical analysis (FTA) as a useful tool to help them decide what to do in the foreign exchange market. The process entails analyzing a currency pair’s historical pricing data to spot patterns, trends, and other crucial market data. Once future price changes are predicted using this knowledge, a profitable trading strategy may be created.

FTA is based on the assumption that the price of a currency pair already incorporates all important market information, including economic and political factors. This means that traders can gain a better understanding of the market and make more educated predictions about future price movements by monitoring the price changes of a currency pair.

The fact that FTA is founded on data and historical market behavior rather than assumptions or opinions is one of its main advantages. This makes it a trustworthy and impartial method of assessing the market. FTA is primarily focused on the price and volume data of a currency pair, as opposed to fundamental analysis, which also focuses on the economic and political issues that have an impact on the market.

Utilizing different chart patterns, trendlines, and indicators, technical analysis analyzes market data. Moving averages, Bollinger bands, and RSI are a few well-known indicators that give traders information about market trends and probable price changes. It is crucial to realize that in order to obtain a comprehensive picture of the market, technical analysis should be utilized in conjunction with other types of analysis, such as fundamental analysis.

Why is Forex Technical Analysis Important?

An essential component of trading on the foreign exchange market is forex technical analysis. By employing this technique, traders can better comprehend market trends and forecast the course of currency values in the future. By doing so, traders can set suitable stop-loss levels to control their risk and make better judgments about whether to enter or quit transactions.

Technical analysis evaluates past price data using chart patterns, trendlines, and numerous indicators. Traders can spot important levels of support and resistance as well as potential price reversal patterns by looking at historical market data. Once future price changes are predicted using this knowledge, a profitable trading strategy may be created.

The objective character of forex technical analysis is one of its main advantages. Technical analysis is unbiased, unlike other types of analysis like fundamental analysis, which is based on judgments and views. Instead, it bases price changes on data and previous market activity. Because of this, traders can use it as a trustworthy and dependable tool to assess the market.

To acquire a thorough picture of the market, forex technical analysis can also be used in conjunction with other types of analysis, such as fundamental analysis. Traders can make better judgments and reduce their risk by combining the insights from technical and fundamental analysis.

Key Concepts and Terminology

When it comes to forex technical analysis, there are a few key concepts and terminology people should be familiar with in order to effectively use the analysis.

Support and Resistance

Support and resistance are key concepts in forex trading that refer to levels at which prices tend to either stop declining or start rising.

Support refers to a level at which demand for a currency is thought to be strong enough to prevent its price from declining further. In other words, it is a level at which buyers are believed to step in and start buying, preventing the price from falling.

Resistance, on the other hand, refers to a level at which selling pressure is believed to be strong enough to prevent the price from rising further. In other words, it is a level at which sellers are believed to step in and start selling, preventing the price from going up.

Support and resistance levels can be identified by analyzing historical price data and chart patterns. Traders use these levels to make predictions about potential price movements and to make buy or sell decisions. For example, if a currency’s price is approaching a known level of support, traders may enter a long position in anticipation of the price rising. Conversely, if a currency’s price is approaching a known level of resistance, traders may enter a short position in anticipation of the price falling.

It’s important to note that support and resistance levels are not always set in stone and can change over time. Traders should regularly review these levels and adjust their trading strategies accordingly.

Trends

A trend in forex trading refers to the general direction that a currency pair is moving in. Trends can be either upward (bullish), downward (bearish), or sideways (consolidating).

An upward trend, also known as a bullish trend, is characterized by a series of higher highs and higher lows, indicating that the price is generally moving higher.

A downward trend, also known as a bearish trend, is characterized by a series of lower highs and lower lows, indicating that the price is generally moving lower.

A sideways trend, also known as a consolidating trend, is characterized by a lack of clear direction, with the price moving in a narrow range without making significant advances or declines.

Forex traders use trends to make predictions about potential price movements and to inform their buy or sell decisions. For example, if a currency pair is in an upward trend, traders may enter a long position in anticipation of the price continuing to rise. Conversely, if a currency pair is in a downward trend, traders may enter a short position in anticipation of the price continuing to fall.

It’s important to note that trends can change over time and that traders should regularly review the trend of a currency pair and adjust their trading strategies accordingly. Additionally, traders often use technical analysis tools, such as trendlines and moving averages, to help identify trends and make more informed decisions.

Chart Patterns

Chart patterns are visual representations of price movements on a currency pair’s price chart that can be used to make predictions about future price movements. In forex trading, chart patterns are used by traders to identify potential trading opportunities and to inform their buy or sell decisions.

Some common chart patterns include head and shoulders, triangles, wedges, and flag and pennant patterns. Each of these patterns has a distinct appearance and is associated with specific price movements and trends.

Head and shoulders patterns, for example, are reversal patterns that indicate a potential trend change from upward to downward. They are characterized by a peak (left shoulder), a higher peak (head), and a lower peak (right shoulder) that form the shape of a human head and shoulders.

Triangles, on the other hand, are continuation patterns that indicate a potential trend continuation in the direction of the previous trend. They are characterized by a narrowing of the price range, with the price making lower highs and higher lows.

Wedges, flag and pennant patterns, and other chart patterns each have their own unique appearance and associated price movements. By analyzing chart patterns, traders can make predictions about potential price movements and inform their buy or sell decisions.

It’s important to note that chart patterns are not a guarantee of future price movements and that traders should use multiple sources of information, including technical and fundamental analysis, to inform their trading decisions. Additionally, chart patterns can be subjective and may not be easily recognizable in all market conditions.

Indicators

Calculations based on the price and/or volume of a currency pair are used to create forex indicators. These computations are done in order to produce indications that traders can utilize to help them decide whether to purchase or sell.

Leading and trailing indicators are two basic categories into which forex indicators can be divided. Leading indicators are used to provide early signals about possible price moves and are especially helpful in trending markets. Examples of leading indicators include moving averages and the relative strength index (RSI).

Lagging indicators are used to confirm trend direction and give insight into probable trend reversals. Examples include Bollinger Bands and moving average convergence divergence (MACD). They are especially helpful in consolidating markets, where price changes are erratic and trends are challenging to spot.

Moving averages, Bollinger Bands, RSI, MACD, and stochastic oscillator are a few of the most used forex indicators. The calculation and interpretation of each of these indicators varies, and traders frequently combine many indicators to provide a more comprehensive view of the state of the market.

The use of many sources of information, such as technical and fundamental research, to guide trading decisions is advised by traders. Forex indicators are not a guarantee of future price movements. Additionally, forex indicators may not be accurate in all market conditions and may produce false indications.

Conclusion

Forex technical analysis is a critical tool for beginners who are looking to make informed decisions in the foreign exchange market. It provides traders with the ability to analyze historical price data, identify patterns and trends, and make predictions about future price movements. Technical analysis is a data-driven approach that relies on facts and past market behavior rather than opinions or guesswork. This is why it is an essential component of most successful FX traders’ trading strategies.

Forex technical analysis is an incredibly powerful tool that can be used to analyze and identify trends in the foreign exchange market. It is a crucial component of most successful FX traders’ trading strategies and can make the difference between success and failure. This article provided an overview of Forex technical analysis for beginners, covering the basics of what it is and why it is important, as well as key concepts and terminology to be familiar with. We hope this article has been informative and that it has provided valuable insight into forex technical analysis.

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The warm weather finally arrived! But before we begin to wind things down for the summer months, let’s catch up once more with the latest developments in Dutch tech. 

Of course, in our mind, the best news from the week that passed was our own TNW Conference taking place in Zaandam, just outside of Amsterdam. (Next year we are back at one of our favourite locations at NDSM island, grab your 2-for-1 tickets now!) 

This year featured some of the best keynote speakers and panellists in our 18-year history, along with rich networking opportunities and the signature festival feel that TNW is known for.

What we are writing about

What we are reading 

Dutch Dealroom rival Bounce Watch secures pre-Seed funding (Silicon Canals)
Noord-Nederland helpt ASML voor Nederland te behouden (Computable.nl)
Europe is at risk of over-restricting AI and falling behind US and China, Dutch prince says (CNBC) 

Dutch startup of the week: Source.ag
Rien Kamman and Ernst van Bruggen founded Source.ag in 2020. Credit: Source.ag

Source.ag is a Dutch agtech startup founded in 2020 by Rien Kamman and Ernst van Bruggen. The company specialises in AI-driven solutions for greenhouse farming to address global food shortages while conserving water usage. 

Source.ag recently launched a new product called Source Cultivate which supports growers in their decision-making process with accurate yield forecasting up to eight weeks before harvest. It claims a 90% accuracy in yield forecasts three to four weeks out, and has been developed in collaboration with top-tier growers. 

Other products track and improve cultivation processes, streamline and enhance greenhouse operations, and also include an autonomous irrigation system which uses AI to adjust irrigation in real-time. 

The startup recently expanded into North America, opening an office in Chicago. It has raised a total of approximately $37mn to date. 

Our weekly coverage of Dutch tech news will be taking a break over the summer. If you have any ideas of what we should feature, a particularly interesting startup to keep an eye on, or what kind of news you would like to see covered, drop us a line and let us know. See you again in September!

Signum Surgical has been granted De Novo clearance for its BioHealx device, which aims to improve the treatment and recovery of anal fistulas.

Read more: Galway’s Signum Surgical gets FDA approval for medical device

UK-based neobank Monzo has unveiled three app-based security features, aiming to safeguard user accounts from criminals even in the case of phone theft.

The new security tools are designed to prevent criminals from transferring or withdrawing amounts from Monzo accounts by offering an additional layer of protection. The digital bank plans to officially roll them out over the coming weeks.

To begin with, customers will be able to use the new “known locations” feature to indicate a specific, safe location (like their home or their workplace) where they need to be when moving amounts of money over a certain limit.

Monzo will use tracking technology to identify if its customer’s phone is in one of the selected locations and block any transactions that fall outside the scope.

Customers can also designate a trusted friend or family member, who also has a Monzo account, to double check bank transfers or savings withdrawals over a certain limit.

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The trusted contact will be able to see some of the transaction details and flag to the bank any suspicious activity. Monzo will put the transaction on hold until the trusted contact confirms it’s safe.

What’s the “trusted contact” feature looks like. Credit: Monzo

Finally, Monzo users will be able to receive a secret QR code either to print and save or to store digitally on another device. Then, they can scan the code with the Monzo app to confirm large transactions.

Monzo says the new features represent a first across mobile banking, as the industry is grappling with dangerously high levels of fraud.

Founded in 2015, Monzo’s mobile-only banking services quickly gained popularity and the startup achieved unicorn status in 2018. The company navigated financial challenges and significant losses during 2020-2021 but ultimately rebounded.

Monzo said it became profitable in 2023 and now counts a total of nine million users in the UK. In March, it raised £340mn in new funding, reaching a post-money valuation of £4bn. It reportedly secured an additional £190mn in May.

Keywords Studios has grown into a massive entity over the years, but EQT says it can increase the pace of its growth by turning it into a private company.

Read more: EQT to acquire Dublin-based Keywords Studios in £2.1bn deal

Google has noted that the rapid advancement of AI has brought attention to the tech’s energy consumption and said it ‘won’t be easy’ to reach its net-zero 2030 goal.

Read more: Google’s emissions surge by 48pc amid AI boom

NASA has given Elon Musk’s SpaceX permission to destroy the International Space Station (ISS) by 2030.

The space station has been continually occupied since 2000 by astronauts doing more than 3,300 scientific experiments above our heads.

But the countries operating the ISS only agreed to run it until 2030 at the latest.

Since 1998, the US, Russia, Japan, Europe and Canada have maintained different sections of the ISS. The agreements to jointly run the space station marked a new era of global cooperation after the Cold War.

But when those agreements run out, the space station will need to be brought out of orbit and Elon Musk’s SpaceX has been given the $843m (£666.4m) contract to do it.

The company will build a vehicle to tow the space station through the atmosphere where it will “destructively break up”, according to NASA.

Crash landing

It will then crash into the ocean, away from populated areas, along with the SpaceX vehicle.

“The orbital laboratory remains a blueprint for science, exploration, and partnerships in space for the benefit of all,” said Ken Bowersox, NASA’s associate administrator for Space Operations Mission Directorate.

While SpaceX will develop the deorbit spacecraft, NASA will take ownership after development and operate it throughout its mission.

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But once the ISS is destroyed, low-orbit will not lie empty.

Private companies including SpaceX, Axiom, Blue Origin and Vast are developing commercial space stations that could launch as soon as next year.

“[Selecting the deorbit vehicle] supports NASA’s plans for future commercial destinations and allows for the continued use of space near Earth,” said Mr Bowersox.

The ISS costs the various space agencies €100bn (£84.6bn) to run, according to the European Space Agency, over 30 years.

NASA said the agency is transitioning to “commercially owned space destinations closer to home”.