IC Markets
What technical analysis is (and isn't)
Technical analysis studies price itself: where it has been, how fast it moved and where buyers and sellers have stepped in before. The idea is simple. Everything the market knows is already in the price, and people tend to react at the same levels again and again.
It doesn't predict the future. What it offers is a framework: which way the trend points, where a trade is wrong, and whether the reward is worth the risk. Most traders pair it with a look at the economic calendar, because a big release can override any chart in seconds.
Trend
Is price making higher highs and higher lows, lower highs and lower lows, or going sideways?
Levels
Where have buyers and sellers reacted before? Those zones are where the next decision happens.
Momentum
Is the move speeding up or running out of steam? Indicators like RSI and MACD help measure it.
How to read our daily reports
Our reports use a handful of terms again and again. Here is what each one means.
- Bias
- The direction the report currently favours (bullish, bearish or neutral), based on market structure. It changes when structure breaks.
- Equilibrium
- The 50% midpoint of the current trading range. Price above it is in the premium half, below it the discount half.
- Premium and discount
- Buyers prefer to buy in discount (below equilibrium) and sellers to sell in premium (above it), which is why reports watch both halves.
- Supply and demand zones
- Areas where price previously left quickly in one direction, suggesting unfilled orders. Supply sits above price, demand below.
- Weak high / weak low
- A swing point that hasn't been defended and is likely to be taken out. Strong highs and lows are the ones that caused a break of structure.
- Equal highs / equal lows
- Two or more swing points at almost the same price. Stop orders cluster beyond them, so they often act as a magnet for price.
Market structure: trend, range and breaks
Structure is the backbone of every chart. Read it first, before any indicator.
Uptrend
Higher highs and higher lows. Buy pullbacks toward support; the trend is intact until a higher low breaks.
Downtrend
Lower highs and lower lows. Sell rallies toward resistance; the trend is intact until a lower high breaks.
Range
Price bounces between clear support and resistance. Trade the edges or wait for a breakout, not the middle.
Break of structure (BOS)
Price breaks the last swing in the trend's direction, confirming the trend continues.
Change of character (CHoCH)
Price breaks the last swing against the trend: the first warning that the trend may be turning.
How to draw support and resistance
- Start on a higher timeframe
Daily and 4-hour levels carry more weight than 5-minute ones. Mark them first, then zoom in.
- Draw zones, not lines
Price rarely turns at an exact number. Use the area between candle bodies and wicks.
- Look for several touches
A level tested two or three times is more reliable than one that has been tested once.
- Expect roles to flip
Broken resistance often becomes support, and broken support often becomes resistance.
- Watch round numbers
Levels like 1.1500 on EUR/USD or $4,300 on gold attract orders and often act as support or resistance.
Go deeper in our support and resistance trading guide.
Forex indicator cheat sheet
Pick one indicator per job (trend, momentum, volatility) and read them in that order. More indicators rarely mean better signals.
| Indicator | Type | What it shows | Best used for | Common mistake |
|---|---|---|---|---|
| Moving averages (SMA / EMA) | Trend | Direction and dynamic support or resistance | Filtering trades with the 50 and 200 period averages | Trading crossovers in a sideways market |
| RSI (14) | Momentum | Speed of moves on a 0 to 100 scale | Divergence and pullbacks in a trend | Selling just because RSI is above 70 in a strong uptrend |
| MACD (12, 26, 9) | Trend and momentum | Shifts in momentum between two averages | Confirming trend direction and divergence | Taking every crossover; it lags in ranges |
| Stochastic RSI | Momentum | Where RSI sits inside its own recent range | Timing entries inside a range or pullback | Using it alone without a trend filter |
| ADX (14) | Trend strength | How strong the trend is, not its direction | Deciding between trend and range tactics (above 25 = trending) | Reading a rising ADX as bullish |
| Bollinger Bands (20, 2) | Volatility | How stretched price is from its average | Spotting squeezes before breakouts | Treating every band touch as a reversal |
| ATR (14) | Volatility | Average range per candle | Setting stop-loss distance and position size | Expecting it to show direction |
| Fibonacci retracement | Levels | Likely pullback depths (38.2%, 50%, 61.8%) | Finding entries in a trending market | Drawing it on a move with no clear swing high and low |
Candlestick signals worth knowing
A candle is only a signal at a level that matters. The same pin bar in the middle of a range means very little.
Engulfing
A candle whose body fully covers the previous one. Strongest at support or resistance, in the direction of the higher-timeframe trend.
Pin bar
A long wick with a small body, showing price was rejected. The wick points at the level that was defended.
Doji
Open and close almost equal: indecision. On its own it means little; after a long run into a level it can warn of a pause.
Inside bar
A candle that stays within the previous candle's range. The break of its high or low often starts the next move.
Learn every candle type in candlestick charts in forex.
Chart patterns cheat sheet
| Pattern | Signal | How to trade it |
|---|---|---|
| Head and shoulders | Reversal | Wait for a close through the neckline. A common target is the head-to-neckline distance projected from the break. |
| Double top / double bottom | Reversal | Confirmed only when price breaks the low between the two tops (or the high between the two bottoms). |
| Ascending / descending triangle | Usually continuation | Trade the break of the flat side, ideally in the direction of the prior trend. |
| Symmetrical triangle | Either way | Price coils into a point. Wait for the breakout and a retest rather than guessing the direction. |
| Flag and pennant | Continuation | A short, tight pause after a strong move. Entries come on the break in the move's original direction. |
| Rising / falling wedge | Often reversal | A rising wedge often breaks lower and a falling wedge higher, especially after an extended trend. |
Patterns fail often. Wait for the confirmation (the neckline break, the close outside the triangle) and keep your stop where the pattern would be proven wrong.
Smart money concepts in five terms
Smart money concepts (SMC) read the chart through liquidity: where stop orders sit, and how large players use them. It is one of the most searched trading topics right now, and our daily reports use its language.
Multi-timeframe analysis, top down
Start wide and zoom in. Each timeframe answers one question, and they should agree before you trade.
- Weekly / Daily The overall trend
Mark the trend and the major levels. This sets your bias.
- 4-hour The setup
Find the zone where you want to trade: a pullback into support, or a retest of a broken level.
- 1-hour The trigger area
Watch how price reacts at your zone: a sweep, a change of character, a rejection candle.
- 15-minute The entry
Time the entry and place a tight, logical stop behind the structure.
Timeframes by trading style
| Style | Entry chart | Direction chart | Typical hold |
|---|---|---|---|
| Scalping | 1 to 5 minutes | 15-minute and 1-hour | Seconds to minutes |
| Day trading | 15 minutes to 1 hour | 4-hour | Minutes to hours |
| Swing trading | 4-hour to daily | Daily and weekly | Days to weeks |
| Position trading | Daily to weekly | Monthly | Weeks to months |
Full walkthrough: multi-timeframe analysis in forex.
Technical analysis pre-trade checklist
Run through these seven checks before every trade. If one fails, wait.
- Higher-timeframe trend and bias are clear
- Price is at a marked level or zone, not in the middle of nowhere
- At least one confirmation: a candle signal, a structure shift or a sweep
- Stop-loss sits behind structure, not at a random distance
- Reward is at least 1.5 to 2 times the risk
- No high-impact news release inside your trade window
- Position size risks no more than 1% to 2% of the account
Six technical analysis mistakes to avoid
Learn technical analysis step by step
Our free lessons, in the order we'd read them.
- Start hereHow to read forex charts
- Start hereCandlestick charts in forex
- LevelsSupport and resistance trading guide
- StructureMulti-timeframe analysis
- IndicatorsWhat forex indicators are and how they work
- IndicatorsComplete moving average guide
- IndicatorsRSI trading strategy
- IndicatorsMACD guide
- IndicatorsADX indicator: measuring trend strength
- IndicatorsStochastic RSI strategy
- Smart moneySmart money concepts (SMC)
- Smart moneyLiquidity sweep strategy
- Smart moneyOrder block trading strategy
- Smart moneyFair value gap (FVG) strategy
Real trade breakdowns
- A Trader Who Rode Gold’s Record Rally to $4,400: What the Trade Looked Like
- Turning $2,000 Into $8,000 on Gold: A Risk Breakdown
- A $3,000 AUD/USD Trade That Should Have Lost, and Didn’t
- A Singapore Trader’s $10,000 Account: 6 Months of Real Trades
- A Malaysian Trader’s First Profitable Quarter: What Changed
- The Trade That Taught a Filipino Trader to Stop Revenge Trading
Technical analysis FAQs
What is technical analysis in forex trading?
Technical analysis studies past price action on a chart (trends, support and resistance, indicator readings) to judge what a market is likely to do next, rather than relying on economic news alone.
Does technical analysis work in forex?
It works as a way to structure decisions: it shows where a trade idea is wrong and where the reward outweighs the risk. Price can't be predicted with certainty, and technical analysis works best combined with risk management and an eye on the economic calendar.
Which pairs do your daily reports cover?
EUR/USD, GBP/USD and gold (XAU/USD), three of the most heavily traded instruments, each with its own report updated every trading day.
How often are the reports updated?
The chart and the technical gauge are live and update continuously, while the written breakdown of key levels and the economic calendar are refreshed each trading day.
What is the best indicator for beginners?
Start with a moving average for trend direction and RSI for momentum. Add ATR later to size stops. A solid read of support, resistance and market structure matters more than any single indicator.
What timeframe is best for technical analysis?
It depends on your style. Swing traders often analyse the daily chart and enter on the 4-hour; day traders use the 4-hour for direction and the 15-minute to 1-hour for entries. Always check one timeframe above the one you trade.
What's the difference between the chart and the technical gauge?
The chart shows real-time price action with its studies. By contrast, the gauge runs a set of moving averages and oscillators on the interval you pick and reduces them to one read, from strong sell to strong buy. Use the chart to see what's happening and the gauge as one input among several.
Are these reports financial advice?
No. They're educational reference material, not personal financial advice or a trade signal. Always do your own analysis, use a stop-loss, and never risk money you can't afford to lose.
Risk warning: our daily reports and the lessons on this page are educational, not signals or financial advice. Forex and CFD trading carries a high risk of losing money quickly. Always use a stop-loss and size positions with your own risk plan.