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How to use Technical Analysis
In this last post of the basic technical analysis series, we will discuss how to use this ancient and efficient technique.
Now that you understand what technical analysis is and what it really means, let’s see how to use it properly. What I’m going to tell you is my view about it, the way I see technical analysis and how I trade and invest.
I use the “classic technical analysis”, and rarely use indicators of any kind, unlike the “modern technical analysis”. I know the most of them, and in my first trading years I did use some indicators, like RSI and OBV, but now, my chart is naked – just candles and volume, and sometimes I use an Exponential Moving Average (ema) and do a Fibonacci Retracement, but that’s all.
And I have a reason for that. Every indicator must use at least one of two possible variables – price and volume, and therefore they are all delayed. I have nothing against indicators, as I said I used them for years, but now I simply don’t see a good reason for that.
What I always look in a chart is its supports and resistances, then I search for some candlestick’s patterns or chart patterns. I see how the volume is doing and may use a 21 ema or trace a Fibonnacci on the chart. This is it, all I need for a living.
As an example, I’ll show you one of my public trades I posted on Tradingview, on UKOIL. Actually, it was two trades, and in this particular case I didn’t use the volume in my decision-making process, it was pure Price Action.
You can see this analysis by clicking here
- 1st trade: Confirmation of a Piercing Line pattern, near a support – LONG. Sold when it did a double top at the hourly chart.
- 2nd trade: Breakout of a Pennant Pattern – LONG. Sold when it reached the green line, which is a resistance zone (previous top).
And that’s it. About 60% profits in less than a month. Again, this is one of my public trades. Check my Tradingview’s profile for more details, and you are invited to follow me. We have a good community there, and we are always talking about the market.
Also, you can check my page about books recommendations. I’ve read a lot of books about the market, and they helped me to develop my own trading style. Check it here, maybe you’ll find something interesting!
