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Graphical methods

Content of Graphical methods section:

The movement of exchange rates is not linear. The decline follows the increase and vice versa, which is the consequence of chaotic movement of demand and supply. It is made up due to an enormous number of factors. There are many agents on the market interested in buying or selling currency. The aims of some agents are far from speculation, but deal with turning currency into cash or non-cash forms.

There is a traditional existence of bulls buying currency at the uptrend wishing to sell it later. On the other hand, bears sell the currency at the downtrend planning to buy it later in higher amounts, but for a lower price. That is why the market rise is called a bullish movement (trend) as well as its decline is the bearish movement (trend).

There are several large categories in which technical analysis is divided. Graphic analysis is one of such categories.

In graphical methods of analysis market movement presented as graphics are thought to predict the market values. These are the earliest methods of analysis because it is quite simple to appreciate them using only a paper, pen, and a ruler.

The hopes of the market figure to repeat itself are the consequence of the thesis concerning the repetition of the history. The analyst has two tasks to solve:

    1. To allocate the figure. 2. To find the location of this figure on the diagram of the market movement.

The general thesis of the chart analysis is that the constancy of human psychology, the basis of the market, can make past steady models (also known as patterns) work in future.

Graphical methods of analysis use both usual and transformed market image. This image includes different price or/and volume charts. The cyclical patterns of price movement are generally used in these methods. Most of these methods were invented much earlier than the ones of other groups. They need no complicated software because their usage is quite easy.

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