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Manual of Technical Analysis of Financial Markets [2024]

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Manual of Technical Analysis of Financial Markets

Technical Analysis of Financial Markets

Technical analysis studies a financial markets asset’s historical behavior to predict future movements, using technical indicators and graphic patterns.

Do you want to learn what technical analysis in Forex is? Are you trading fundamentals and looking to complete or change your trading style? Whatever your goal, this manual on technical analysis tells you everything you need to know about financial market.

You will also learn:

  • What is technical analysis, and how did it come about
  • Principles of technical analysis
  • Types of trading charts and Japanese candles
  • Tools to do technical analysis and chart figures
  • Technical analysis indicators
  • Technical Analysis with Multiple Time Frames (MTFA)
  • How to analyze a chart through MetaTrader
  • Advantages and disadvantages of technical analysis

And lots of other information!

What is Technical Analysis

The technical study of financial markets is a process to anticipate or forecast the direction prices will take, based on the asset’s historical behavior.

The following are particular analysis


volumes traded

time frames

To perform technical analysis, traders use technical, mathematical, and statistical indicators and graphical indicators. The conclusions thus obtained help them to make decisions about their positions in the stock market.

Technical analysis can are of two types:

➜ Statistical analysis: It analyzes technical indicators calculated from mathematical formulas linked to stock market prices.

➜ Graphical analysis: also called chartism, it is the analysis of price curves, looking for particular configurations.

Various traders specialize in only one of the two fields; others use both in complementarity.

Therefore, technical analysis uses special tools to determine the probable course of prices:

Chartist figures

To carry out their technical analysis, traders use horizontal lines, trend lines, and Fibonacci retracements to identify famous classic chart figures.

↳ Among the figures that can be analyzed by technical analysis, we find, for example, symmetric triangles and consolidation figures.

These formations show up the behavior of buyers and sellers in the market.

Japanese candles data

You can also analyze the Japanese candles’ information to identify at a glance the opening, closing, high and low prices during a given time. Like chart figures, Japanese candles help identify buyers’ and sellers’ behavior over a short period.

Technical indicators

Finally, to complete their analysis, traders use technical indicators to better understand market conditions and price trends.

Origin of Technical Analysis in Trading

Forex technical analysis is present since the emergence of supply and demand-driven markets. Around the 17th century of Dutch traders and the 18th century of Japanese rice traders.

In the late 1800s, technical analysis became popular with traders thanks to The Wall Street Journal, Charles Dow.

Among his contemporary compatriots, there are other pioneers of technical analysis, such as:

Ralph Nelson Elliott is the founder of the famous Elliott theory.

William Delbert Gann, the founder of the Gann angle theory

Richard Demille Wyckoff

Throughout history and for most of the 20th century, financial markets’ technical analysis became limited due to chartism. It was impossible to perform statistical calculations with large amounts of information.

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