Price movement: You can look at the stock prices at the bottom of the television screen or, if you are trading currencies in the forex market, could be regarded as the exchange rate rises and falls on the computer screen. Prices move and you wonder if your behavior means something. Could the market send signals that you can use to make your decision? How, exactly, you will study the market?
If anyone wants to make money in the market, you must have a way to study it. There are mainly two approaches: fundamental and technical. Fundamental analysis focuses on value, but this is the subject of another article. Technical analysis, on the other hand, focuses on price and movement.
The price movement has the following properties that traders can study for help in their decisions:
1. Trend – its persistence to move in one direction,
2. Volatility – the magnitude of its fluctuations on a periodic basis,
3. Momentum – the rate of acceleration and deceleration,
4. Cycle – their tendency to move in cyclical patterns, especially in the futures market,
5. Market Strength – the number of transactions that support their movements,
6. Support and Resistance – its tendency to rise or fall to a certain level and then reverse, repeatedly.
Analysts, using the technical approach to market analysis, have developed their own set of indicators, different to those used by fundamental analysts. These indicators are used to measure the properties of price movement. Luckily for traders of our time like you you do not have to invent their own instruments. You just need to learn how they work and how to use them.