Financial Technical Analysis

Financial Technical Analysis discusses the prediction of future price movements in relation to it’s movements in the past, through observing historical price actions technical analysis foresees future price levels that have the highest probability to be visited again.
Technical Analysis is drawn from the Dow Theory which states that:
1- price discounts everything
2- prices move in trends and patterns

From this perspective Technical Analysts study price action in order to make statistically winning trades in the financial market, markets tends to move in trends, short and long term, when technical traders define those trends they can make more informed decisions in their trading, and
achieve higher returns on their investments.

Technical Analysis is utilized to predict the price movement of any financial instrument; stocks, bonds, derivatives, currencies, and commodities, technical analysis examines supply and demand for a certain financial security or instrument to test the likelihood of trend continuation or reversal using technical indicators such as moving averages, volatility, and volume in addition to price patterns in order to better perform buying and selling in the market on different time frames, for example short term traders may apply technical analysis to one-minute up to 4 hours’ time frame, while long term investors may apply it to larger time frames from the daily up to the monthly time
frame.

In conclusion, When talking about price action we do mean technical analysis, it is best deployed in hedge funds, where short and medium term trends and price actions could be benefited from to achieve huge profits on the short run, unlike mutual funds which give more attention to fundamental analysis of economic indicators, financials, and securities’ intrinsic value.

Technical analysis takes a lot of training and practice in order to be mastered, one must equip him/herself with patience and control over emotions in order to be a successful technical analyst/trader. There is some licenses and certifications for market practitioners such as CMT : chartered market technician, awarded by the MTA : market technicians association, and CFTE : certified financial technician & mfta: master of financial technical analysis awarded by IFTA : international federation of technical analysts.

We hope we gave you a brief yet detailed view of technical analysis, and we wish you a distinguishable journey with your training and trading.

By Ahmed Refaie,
CEO GPI Global Partners Investments Ltd, and Author at The Market Mogul