Investing in the Forex market and the stock markets, investors long, medium and short term make their investment decisions on the basis of two main factors. They suggest either fundamental analysis or technical analysis. Some traders use a combination of these two methods, which is obviously justified. The choice of investment method depends on of many factors and it is a topic for an entirely separate post. Investing on calendar spreads traders turn their attention chiefly to factor that in many ways is not that important in the investment in those markets .
Technical analysis on spreads is less important due to the relatively low volatility spread markets. In the Forex market or the stock market instruments during the day sometimes change their prices by 100 pips a day. Therefore, it is important to technical analysis to capture potential turning points. Market spreads are composed of two outright price difference on the same instrument but with different maturities. For this reason, the volatility of these markets is generally very limited and could be divided into two markets moving pips a day, three to eight pips and eight to thirty pips per day.
With that information, you can see that technical analysis is not so relevant. Prices simply changing very slowly and very often made once the analysis is valid for quite some time. It is worth to analyze chart and know what is the sentiment of the market.
Despite many different variables that differ outright charts and the spread charts it should be emphasized that techniczal analysis works both on outrights and spreads.
To illustrate to intercede two graphs showing the two markets with different volatility calculated. The first graph shows that technical analysis is not necessary. Chart moves sideways, no major changes to explain the technical analysis. The market is played bid / offer and the order will be made in about three latter stages.
Technical analysis on spreads is less important due to the relatively low volatility spread markets. In the Forex market or the stock market instruments during the day sometimes change their prices by 100 pips a day. Therefore, it is important to technical analysis to capture potential turning points. Market spreads are composed of two outright price difference on the same instrument but with different maturities. For this reason, the volatility of these markets is generally very limited and could be divided into two markets moving pips a day, three to eight pips and eight to thirty pips per day.
With that information, you can see that technical analysis is not so relevant. Prices simply changing very slowly and very often made once the analysis is valid for quite some time. It is worth to analyze chart and know what is the sentiment of the market.
Despite many different variables that differ outright charts and the spread charts it should be emphasized that techniczal analysis works both on outrights and spreads.
To illustrate to intercede two graphs showing the two markets with different volatility calculated. The first graph shows that technical analysis is not necessary. Chart moves sideways, no major changes to explain the technical analysis. The market is played bid / offer and the order will be made in about three latter stages.
Photo 1. Low market volatility
The second figure shows a clear variation. Here, technical analysis is the most reasonable. And the trend is clearly correct. Speculation on such a volatile market requires technical analysis - despite the fact that it is spread, the graph showing the difference in prices.
Photo 2. High market volatility
