Technical analysis is price movement study. You can track the history of price movement by using price charts and try to work out which way the prices are likely to go in the future.
Online FX brokers will give you a variety of different tools which you can use in technical analysis. Here are some of the most common ones:
Bollinger Brands
These are used to measure the volatility of the market. They comprise 3 lines:
1. A moving average in the center.
2. A lower band which shows the moving average minus 2 standard deviations.
3. An upper band which shows the moving average plus 2 standard deviations.
When the volatility of the market is low, the bands will come further together. When the volatility of the market is high, the bands will spread further apart.
The Bollinger Bounce
The middle band usually stays between the outer bands. The outer bands can be compared to border control. When the middle band gets too close, it is bounced back towards the middle. This is why it is called the Bollinger Bounce. It is helpful to be aware of this because if you see the middle band getting close to an outer band, it will probably bounce away.
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