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November 14, 2022

13 Questions About Technical Analysis

13 questions about technical analysis that everyone should know, especially traders in forex market.



1. What are the three states of the market?

Answer: Uptrend, donwtrend, and sideways.


2. What is an uptrend?

Answer: Price makes new highs higher than old highs, and new lows higher than old lows.


3. What is a downtrend?

Answer: The price makes new highs lower than the old highs, and new lows lower than the old lows.


4. What is a sideways trend?

Answer: It is the equilibrium of the market, supply and demand are in balance. Price makes equal areas of tops and bottoms.


5. What is a trend channel?

Answer: A trend channel is a set of parallel trend lines defined by the highs and lows of an asset’s price action. A trend channel, also sometimes called a price channel occurs when the price is moving between two parallel trendlines.


6. What is a strong uptrend?

Answer: The trend channel has a steep slope (slope up). During a uptrend, volume increases when the price goes up & volume decreases when the price corrects down.


7. What is a strong downtrend?

Answer: The trend channel is steep slope (sloping down). During a downtrend, volume increases when the price goes down & volume decreases when the price corrects up.


8. When does the trend weaken?

Answer: The trend channel is from sloping to sideways, and at the same time the trading volume is decreasing.


9. Does each timeframe have its own trend?

Answer: That's right.


10. What is the support zone?

Answer: It is a price range that can be considered to buy. It could be an old top or an old bottom.


11. What is the resistance zone?

Answer: It is a price range that can be considered to sell. It could be an old top or an old bottom.


12. When does a trend reverse from an uptrend to a downtrend?

Answer: The price fell below the nearest support area, volume increased at the breakout area, and the price line showed a bearish trend.


13. When does a trend reverse from a downtrend to an uptrend?

Answer: The price rises above the nearest resistance area, volume increases at the breakout zone, and the price line shows an uptrend.


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