What is the First thing to analyse when you start doing your Technical Analysis?
𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐓𝐞𝐧𝐞𝐧𝐭𝐬 𝐝𝐞𝐬𝐜𝐫𝐢𝐛𝐞𝐝 𝐢𝐧 𝐭𝐡𝐞 𝐃𝐎𝐖 𝐓𝐡𝐞𝐨𝐫𝐲.
You have to Analyse the OvYou have to Analyse the Overall trend of any asset firstly. The principles mentioned by 𝐂𝐡𝐚𝐫𝐥𝐬 𝐃𝐨𝐰 are the basis of the Technical analysis and are also known as the Father of the Technical Analysis.
He mentioned how to look for a trend’s direction by incepting the concept of the 𝐌𝐀𝐑𝐊𝐄𝐓 𝐒𝐓𝐑𝐔𝐂𝐓𝐔𝐑𝐄, i.e a trend is up until it makes higher highs following the higher lows (HH-HL) and a trend is down until it makes Lower Lows following the Lower Highs (LL-LH)
Now once the trend is known you can move ahead looking for the strength in the trend by studying the Elliott Wave Theory, Fibonacci Tool concepts.
But, all this we look at should be analyzed in 3 sub-trends of any known trend. For example, If the trend is UP, you will then have to look at its Primary, Secondary, and Minor Trends to get to know from where you can make an ENTRY. These concepts are described in the Dow Theory.
Technical Analysis works best when more historical Prices Trends are taken into context with the demand/supply, Buying selling pressure and then confirming them with Indicators.
To Enter in a trend perfectly you will also have to look into different time frames to get a clear price structure for timing the ENTRY. For example, if you are an Intraday trader then you may select a 3min or 5min time frame for the entry purpose but, you will also have to confirm the trend’s direction and market structure that should be synchronized in the direction of the entry time frame. Here the confirmation time frames for 3min can be 15min and 5min can be 30mins.
Primary movements represent the broad underlying trend of the market and can last from a few months to many years. These movements are typically referred to as bull and bear markets. Once the primary trend has been identified, it will remain in effect until proven otherwise.
Secondary movements run counter to the primary trend and are reactionary in nature. In a bull market, a secondary move is considered a correction. In a bear market, secondary moves are sometimes called reaction rallies. A secondary trend is also called an Intermediate trend or retracement trend of the primary trend.
Daily fluctuations are minor fluctuations that occur within the Primary and Secondary trends. Whatever time frame you’re trading, find your Primary and Secondary trends, and don’t bother with trying to profit from minor (and usually random) trends. It is important to use closing prices since intraday fluctuations are more subject to manipulation.
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