5 Easy Steps to Perform Technical Analysis

"Technical analysis is difficult!"

Have you ever heard such a phrase? Often? OK. On this occasion let me reiterate; typed in bold capital letters nan: THAT LIE!
Technical analysis is not as complicated as it looks. Do not believe?
Let's make it like this. Take a look at these pictures and tell me where the direction of price movement in general. Up or down?Does your answer? Down? Hey, you just do the technical analysis and your answer TRUE. So it's not hard is it?
What you just did is a basic application of technical analysis, which determines the direction or TREND. You did well. That is, you already have a foundation strong enough to be able to do more sophisticated technical analysis. What do you need? One of the most important is: PATIENCE. Second: the right learning resources.
Now, you might actually could not wait to find out what are the steps in doing the technical analysis. Previously, you must first know three important things in technical analysis, technical analysis: the basic concept, the concept of trends, as well as the concept of support and resistance. Feel free to read and read for a while.
Then, only then you can do the following five simple steps to perform technical analysis very well. Let's peel one by one.
1. Open the chart and identify ongoing trends
The first step you need to do of course is to open a chart, and then see the ongoing trend. You can choose, a trend which you want to participate and benefit. Recognize the ongoing trend, ranging from long-term trend, then retreat to the medium-term trend or a short-term.
Although you may choose a trend which will be utilized, it is advisable to seek long-term trend (major trend) and follow it. Remember, "the trend is your friend".If you have to recognize its trend, then the best strategy for you is to take a position (transaction) is in line with the ongoing trend. If the current trend is up (uptrend), then you should look for opportunities to "buy". Conversely, if its trend is down (downtrend), then look for opportunities "sell".
2. Determine the support and resistance
Once you can recognize the ongoing trend, the next step is to determine where support and resistance levels. You can look for opportunities to "buy" in the area of ​​support or "sell" in the area of ​​resistance. Of course you can not forget the first step above, which is taking the position that the direction of the trend.
In other words, if you look at the current trend is an uptrend, then seek the position of "buy" in the support area, and vice versa.
Levels of support and resistance can also be utilized as a "warning" if it turns out the price does not move as you expect. If the support breaks, for example when you previously had open position "buy", then the break of the support should be a warning to the cut-loss.
3. Take advantage of Moving Average
You can also use moving averages (MA) to identify trends. If it is difficult to draw a trendline, you can see the movement of the MA to help you identify the trend. Simply put, if you look at the MA moves down and the price moves below the MA, so the current trend is a downtrend. Conversely, if you look at the MA moves up and the price moves above the MA, so the current trend is an uptrend.
In addition, the Supreme Court could also serve as support and resistance. If the MA is above the price movement, it serves as resistance. If the MA is below the price movement, its function is as a support.
4. Filter with indicator oscillator
Oscillator indicator can give an idea of ​​whether the market was in an overbought (overbought) or oversold (oversold). Overbought condition means the state when prices are considered high enough at the time. This condition is often accompanied by a decline in prices. Instead, the oversold condition means that the price is now very low at the time, and is often followed by rising prices.
When the oscillator indicator has been showing overbought indication, then you need to do is to wait for a confirmation signal to sell. Conversely, if the oscillator is showing oversold indication, wait for confirmation of a buy signal.
But you need to note that it is not always overbought or oversold conditions followed by a reversal of the direction of price movement. There are times when the indicator continues to be in overbought or oversold for some time but the price continues to move to continue the previous direction. To work around this, you have to adjust the signals given by the indicator with the ongoing trend. In an uptrend, just look for buy signals only, otherwise a downtrend look just sell signal only. This method is relatively safer.

Indicators that you can use them are stochastic and CCI. Oh yes, there are important things you need to remember: DO NOT USE TOO MANY INDICATORS, because it "kelatahan" that makes technical analysis becomes complicated. Use one or two technical indicators only, a maximum of three. In this blog, there is already an article discussing the simple analysis technique using only the trendline, the stochastic and CCI. Please read here.
5. Set the stop loss and profit target
The last step, determine the level of stop loss and profit target of transaction you make. In determining the stop loss and profit target, you must not forget the rules of risk-reward-ratio, where stop loss (risk of loss) should not be greater than the target profit. This rule should not be violated.
You also need to determine how much the volume of your transaction. Customize with your trading plan, so that if you lose, the risk that you receive do not exceed your risk tolerance. More details on this, please read about the management of capital in our education page.
Well, after you follow these five easy steps above, hopefully you are no longer going to think that technical analysis is difficult. Are actually traders themselves who make the analyzes she made more complicated, because it does not follow the five easy steps as outlined in this article.
So, congratulations to perform technical analysis with joy.