What technical analysis is all about….

The purpose of technical analysis of market price charts is to a) filter out the cyclical up/down tactical changes in momentum so as to reveal the underlying strategic trend, b) to de-trend the price graph so that only the tactical cyclical changes in momentum remain, and c) to use volume and/or open interest to measure the level of commitment to a price move.

Trading strategies based on technical analysis require taking less risk on trades against the trend (perhaps none at all,) and entering trades when the tactical momentum shifts direction from extreme levels.

That’s it. It’s that simple. The only differences are the mathematical tools used to smooth out tactical cycles of momentum and to de-trend the price data in order to emphasize them.

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2 Responses to “What technical analysis is all about….”

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  2. Forex Wiki…

    […]What technical analysis is all about…. « Strategesis[…]…

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