Technical analysis is a tool used by traders to understand price movements and make informed decisions. A beginner who masters this skill becomes capable of entering and exiting the market at the right time, reducing losses and increasing profit opportunities.
The first step to understanding technical analysis is to get familiar with charts. These charts display price movements over a certain period of time. Through them, trends, patterns, and levels that the price interacts with frequently can be observed.
One of the most important concepts in technical analysis is support and resistance levels. Support is a level where the price stops falling and starts rising because it represents an area with strong demand. Resistance is a level where the price stops rising and starts falling because it is an area with strong supply. When the price breaks through a resistance level, it often continues to rise. When it breaks through a support level, it may continue to fall.
To determine the entry point, you need to monitor these levels. If the price approaches a strong support level and signs appear that buyers are starting to enter, it may be a good buying opportunity. On the other hand, if the price approaches a strong resistance level and signs of weakness in the upward trend begin to appear, it may be the right time to exit or sell.
Among the tools that help confirm these decisions are technical indicators. One of the most famous is the Relative Strength Index, which measures the market's saturation with buying or selling. If the reading is very high, it means the market may be ready to reverse downwards. If it's very low, there may be an opportunity for a rebound upwards.
Also, moving averages help determine the overall trend. If the price is moving above the average, this indicates an upward trend. If the price is below the average, this indicates a downward trend. The crossover of moving averages can be used as a signal to enter or exit.
But the most important thing is to have a clear plan before entering any trade. You should define the price target you aim to reach and determine the stop-loss level at which you will exit if the market moves against you. This plan protects you from emotional trading and gives you the discipline in decision-making.
Trading without defining entry and exit points is a big risk. The market does not forgive those who enter randomly. Every trade should be based on analysis, and every decision should be supported by evidence from price movements and indicators.
Final advice
Learning technical analysis takes time and practice, but it is one of the most important tools that distinguish successful traders from random ones. Don’t rush, start with simple experiments, and observe how the price reacts to different levels. Over time, you will be able to read the market with confidence and make accurate decisions.