The 3 basics of technical analysis

To trade you need to know the technical analysis well.

Technical analysis is the analysis of how prices have moved in the past.

Understanding how the prices of a financial instrument have moved in the future allows us to clarify how this asset will move in the future. This is how technical analysis works.

But let’s see the 3 pillars of a good technical analysis.

1) The trendlines

Trend is your friend. Who is it that has never heard this phrase.

But to understand and exploit the current trend it is necessary to draw trendlines. Which are points of connection between the lows or the maximums touched by an asset.

Combining these points will come out an oblique line, just the trendline. Which are points beyond which an asset could rebound.

2) Supports and 3) Resistors

The supports and resistances follow the same principle of trendlines, with the difference that they are horizontal and not oblique lines.

They must be drawn at historical price levels, in which the asset in the past has rebounded.