Technical Analysis: How to Read the Price Action

Regardless of the school of analysis to which we belong, most of us will face some problems with the argument that price action is all that matters in the trade issue, in the end, the only determinant of our profits and losses is the same price. We may have some rational and well-thought-out rationales on which to base our forex analysis and strategy, but if we can not confirm it through price action, the sad fact is that it will become worthless.

Technical analysis takes this concept a step further, and claims that all that matters in the matter of trade is the price movement itself. In other words, traders should ignore news, statistics and data in parallel with economic and political developments and only focus their attention on price action. This position is based on the belief that the price movement of knowledgeable traders who have a profit appetite reverses all 1K Daily Profit information available to the public at any time through the price movement, so it would be futile to try to gain advantage in the market by staying informed Permanent with all data. It will not only be impossible, analysts say, but it will be useless, because the price movement includes all available information in order to unload the best brains in the market. Technical analysis prompts us to study the markets and ignore anything else and thus focus our attention on the only important information in this market is the price.

1K Daily Profit
1K Daily Profit

Critics of the logic of technical analysis believe that while the price does not represent all buyers and sellers in the market, it also does not reflect the consensus and therefore can not be a true crossing for the views of the general market. In other words, nothing can be described as market opinion. In addition, they argue that although price action in the short term is difficult to predict, however, long-term economic events establish clear trends that can be foreseen and interpreted through fundamental analysis. Technical analysts defend their school by saying that basic analysis is difficult and there is nothing as reliable as the technical studies and it takes a lot of time.

Technical analysis tools are applied as shown on the chart. 1K Daily Profit Indicators are used to evaluate any price models to generate sell or buy signals while price models are interpreted to determine the underlying momentum. Technical analysis does not claim to provide error-free results or answer all questions in the minds of traders, but it helps to provide alternative scenarios that enable them to identify the deal with higher profitability potential. The technical trader must have a mind to deal with the possibilities and must train himself to accept the idea of ​​bearing some losses when it becomes unavoidable.

Let us conclude from this brief study that in a highly chaotic Forex environment, capital management and emotion control rules are the most important, regardless of the strategy and quality of analysis you use. To learn forex, we will need to maintain our capital and capital management is how you will know how to maintain it. With persistence and commitment it will not be difficult to succeed in the Forex market, but without these two factors it will not be possible to achieve luxury dreams or swim in lakes of gold or even silver.

Why Kijun Sen Is Superior to the Moving Average

The Ishimoku Kinkoz Huo FX Index consists of five lines. In this article, we will focus on Kijun Sen (red line), and how to compare it with the most famous moving average line (violet line).

Let’s start with the equation, considering that Kijun Sen measures the 26 past periods, so we can compare it with the Muffin 26 period:

Kijun Sen = (highest peak + lowest floor) / 2 for the previous 26 period
The Muffing line 26 period is equal to the average closing price of the previous 26 period

By taking average price caps, Kijun Sen reflects the balance, or 50% of the price correction, taking into account fluctuations. Kijun Sen flat horizontal line means that the price caps have not changed, and that the market is undergoing consolidation.

Prices tend to tend towards the equilibrium line, as indicated by the blue circles in the chart above. Once a strong trend is identified, corrections to Kijun Sen act as more conservative entry points. On the other hand, the Muffing line 26 does not provide such a view as the fluctuations and balance are not taken into consideration. Moving usually moves continuously and does not show any sideways.

Since Kijun Sen reflects price equilibrium, it changes only when price caps change, unlike traditional muffin lines. This feature allows Kijun Sen to better monitor price movements, which is why traders typically prefer to rely on Kijun Sen to determine stop loss positions as well. Kijun Sen is part of the Ishimoku Kinko-ho index that you can find on the MetaTrader 4 platform.