The term ‘Confirmation’ in technical analysis refers to the process of using multiple indicators or analysis techniques in order to increase the reliability of a trade signal or for verification of a trend. The key purpose for confirmation is that by combining multiple information sources, traders can thereby increase their confidence in a particular signal or trend and successfully make better-informed trading decisions.
What are the different approaches for confirmation?
There are various ways to approach confirmation in technical analysis. Traders can use different techniques depending on their individual trading styles and risk tolerance. Some of the common methods of confirmation include using multiple indicators on the same chart, analysing different time frames, as well as using both technical and fundamental analysis.