Technical analysis differs from fundamental analysis. This analysis is based on three assumptions: The market discounts everything,.
Price moves in trends.,History tends to repeat itself.
These are just indicators and supporting tools and not decision makers. The most
popular forms of technical analysis are simple Moving Averages(MA) and Relative Strength Index (RSI). A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random short-term price fluctuations. It is a trend-following, or lagging indicator
because it is based on past prices.and works in trending times and not in side ways.
RSI can be used to identify the general trend. In terms of market analysis and trading signals, RSI moving above the horizontal 30 reference level is viewed as a bullish indicator, while the RSI moving below the horizontal 70 reference level
is seen to be a bearish indicator.
, , Technical Indicators, Buying Zone, Moving average, Relative Strength Index, Technical indicators
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Fibonacci Series and Fibonacci retracement
Fibonacci series is the sequence of numbers in which each number is the sum of the previous two numbers in the sequence. Fibonacci Series is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,………….
Golden Mean is 1.618 Logic behind golden mean is the ratio of two consecutive numbers in fibonacci series is same for all the two consecutive numbers.
Example 1: 21/13=1.618 Example 2: 144/89=1.618
Fibonacci Retracements are ratios used to identify potential reversal levels. The most popular Fibonacci Retracements ratios are 23.6%, 38.2% and 61.8%.
These ratios are found using the Fibonacci sequence
1. 61.8% – dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153
2. 38.2% – ratio is found by dividing one number in the series by the number that is found two places to the right.
3. 23.6% ratio is found by dividing one number in the series by the number that is three places to the right.
Fibonacci Retracements used to identify support and resistance zones during the correction of the trend
In bullish retracement
Use the Fibonacci retracement tool to connect the trends bottom & top, by doing this Fibonacci retracement levels will be plotted in the chart.
When the price retraces from the peak then fibonacci retracement levels will act as a support zone.