Technical

Prices are permanently influenced by trend, momentum, mean reversion, and the passage of time. Technical Analysis is all about this.

Suscribe
Blog
Follow us on

Technical Analysis

Navigating Market Forces with Precision and Insight

The price of an asset is always influenced by three concurrent forces:

  • The trend.
  • Momentum.
  • Mean reversion.

Alongside these forces, time progresses, affecting all three aspects and establishing temporal cycles.

It’s important to highlight that many technical analysts often fail to recognize these different areas of study. Market Analysis, a trading strategy, or the creation of an investment portfolio should consider these nuances to be complete. Each aspect or nuance of technical analysis has countless tools that aid in its analysis but study entirely different things.

Price

Unlocking Timeless Trends for Profitable Trading

The daily, weekly, or monthly closing reflects the equilibrium price of an asset at that moment, with a given amount of available information. To analyze its trend, it is fundamental to remove the time factor from its analysis.

  • Evaluating the price without considering the time factor. An essential methodology to design a trading strategy suited to our temporal horizon and objective. Excluding the time factor provides us information on the prevailing trend in each time frame. The hourly, daily, or weekly trend may not coincide, but if we remove time from the analysis, the trend of each time frame emerges on its own, just by looking at the correct chart. Observing the price in different time frames (Trigger, Operational, Main) allows us to design a trading strategy and eventually an investment portfolio, which can have assets ranging from digital currency to the future of sugar.

Price + Time

Analyzing the past, defining the future.

Introducing the time factor brings about countless technical indicators that study the asset’s trend itself. This area includes countless trend technical indicators.

  • Japanese candlestick patterns.
  • Detection of accumulation and distribution zones.
  • Theoretical application of Elliott waves.
  • Technical Indicators.
  • Fibonacci retracements. All these aspects analyze price behavior. Where it wants to go, where it doesn’t want to go, how extended it is in a given movement but focus on identifying trends.

Price + Time

  • Pure chartism.
  • Volume and volume profile.
  • Identification of support and resistance levels. Accumulation-Distribution.
  • Time Cycle analysis to identify recurring patterns over time.
  • Analysis of time as a negation factor.

Momentum and Mean Reversion

  • All technical indicators that incorporate volatility and standard deviations are considered.
  • Price oscillators. All aim to identify overbought-oversold zones. Often, it’s easier to understand where prices don’t want to go than to anticipate where they will. This change in focus is as important as everything mentioned before.

Any trading strategy that forms an investment portfolio cannot analyze one aspect without analyzing the other. To further complicate things, an investment portfolio must include a complementary, concrete macroeconomic analysis, which provides a platform to support technical analysis in all its forms. An hypothesis that identifies which part of the economic cycle we are in.

Suscribe

Copyright © | 2024 Intermarketflow | All Right Reserved