Foreign exchange technical analysis

foreign exchange technical analys forextrad cashback forexgwebsiteonline study to historical forextradingbrokerwebsite forex trading site volume data, and then predict the future price direction This type of analysis focuses on the composition of charts and formulas to capture the major and minor trends, and by estimating the length of the market cycle to identify buying/selling opportunities Depending on the time horizon you choose, you can use intra-day (5-minute chart, 15-minute chart, 1-hour chart, 4-hour chart) technical Analysis, but also the use of daily, weekly or monthly charts chart technical analysis A, the basic theory of foreign exchange technical analysis  (1) Dow Jones theory this technical analysis in the oldest theory that prices can fully reflect all existing information available to participants (traders, analysts, portfolio asset managers, market strategists and investors) to master the knowledge has been in the markup behavior Currency fluctuations caused by unpredictable events, such as Gods will, are included in the overall trend Technical analysis aims to study price behavior in order to draw conclusions about the future direction The Dow Jones theory, developed primarily around stock market averages, holds that prices can be interpreted as wave forms consisting of three amplitude types - This theory can also account for the backwardation pattern, which is the normal phase that a trend goes through to slow down its movement, with such backwardation pattern levels being 33%, 50% and 66%  (2) Fibonacci backwardation phenomenon This is a widely used group of backwardation phenomena based on numerical ratios generated by natural and man-made phenomena. This phenomenon is used to determine the size of the rebound or retracement between the price and its underlying trend The most important levels of the inverse phenomenon are 38.2%, 50% and 61.8%  (3) Elliotts wave Elliott school of scholars to fix the wave pattern to classify the price direction These patterns can indicate future indicators and reversals and the trend of the same direction of movement of the wave is called driving wave, and the trend of the reverse movement of the wave Elliotts wave theory classifies push and correction waves into five and three main directions, respectively. These eight directions make up a complete wave cycle that can span from 15 minutes to decades. The key is to be able to identify the environment in which a particular wave Elliott School also uses the Fibonacci inversion phenomenon to predict the peaks and valleys of future wave cycles Second, the main elements of technical analysis of foreign exchange  (1) find the trend on technical analysis, you may first hear the following aphorism: the trend is your friend to find the dominant trend will help you oversee the overall market direction, and can give you more Weekly and monthly chart analysis is best used to identify longer-term trends. Once the overall trend is identified, you will be able to select trends over the time span you wish to trade so that you can buy the dips in the upside and sell the upside in the downside (2) Support and Resistance Support and resistance levels are points on a chart that are under constant upward or downward pressure Support levels are usually the lowest points in all chart patterns (hourly, weekly or yearly), while resistance levels are the highest points (peaks) on a chart When these points show a recurring trend, they are identified as support and resistance The best time to buy/sell is at support/resistance levels that are not easily broken Once these levels are broken, they tend to become reverse barriers. Thus, in an upward trending market, a broken resistance level may become support for an upward trend; however, in a downward trending market, once a support level is broken, it turns into resistance  (3) Lines and channel trend lines are simple and practical tools in identifying the direction of the market trend straight up Naturally, the second point must be higher than the first point. The extension of the line helps determine the path the market will follow in order to move up the trend is a specific method used to identify support lines/levels. Conversely, downward lines are drawn by connecting two or more points into a trade. A channel is defined as an upward trend line parallel to the corresponding downward trend line. Two lines can indicate an upward, downward or horizontal corridor of price. The common property of a channel that supports the connection point of a trend line should be located between the two connection points of its inverse line  (4) Averages If you believe that trends are your friends creed in technical analysis, then moving averages will benefit you greatly. Averages show the average price at a given time within a given period They are called moving because they follow the same time measure and reflect the latest average One of the shortcomings of moving averages is that they lag the market and therefore do not necessarily serve as an indication of a trend shift To solve this problem, using shorter period moving averages of 5 or 10 days would be better than 40 or 200 days Alternatively, moving averages can be used by combining two averages with different time horizons. Whether using 5 and 20 day moving averages or 40 and 200 day moving averages, buy signals are usually detected when the shorter term average crosses the longer term average upwards. There are three mathematically different types of moving averages: simple arithmetic moving averages; line weighted moving averages; and square factor weighted averages of which the last is the preferred method because it gives more weight to the most recent data and considers the data over the entire cycle of the financial instrument Third, forex technical pattern analysis Content forex technical pattern analysis, is by summarizing and summarizing the price chart on the previous price evolution pattern to predict the future price trend of a method of analysis typical price evolution patterns include two types, one is the reversal pattern, one is a sustained pattern  (1) reversal pattern 1) double top double top (DoubleTop) commonly known as the M-head graph double top in the graph is a major signal of a turnaround when the price In a certain period of time, two consecutive rises to a similar height and the formation of the price trend graphics double top pattern like two hills connected, appearing at the top of the price level, reflecting the market is light when the price from the first top back after the volume is usually shrinking again, if the price falls below the previous support line (neck line), it will be a more rapid slide, the support line is therefore changed to resistance line According to the above chart example, from A point to point B is an upward trend when encountering resistance, the market then fell back in the low stay more than 3 months later, the market rose again to another high C point but the market quickly declined and formed a double-top graphics can be seen, the trend has indeed reversed, if the price fell below the price of point A will send a signal through the support level 2) double bottom double bottom (DoubleBottoms) commonly known as W bottom it is when the price in a certain period of time for two consecutive falls to a low point and the formation of the trend graph when the double bottom, is usually reflected in the downward movement of the market conditions from the bear market to bull market once the formation of double bottom graph, must pay attention to whether the graph is sure to penetrate the resistance line, if the penetration of the resistance line, indicating that there is a strong demand for volume usually due to retracement and a significant increase in double bottom can also use technical analysis indicators in the Money Flow Index and Volume Balance Index (OBV) for analysis of buying and selling strength used if the price penetrates the resistance line, the resistance line therefore becomes a support line 3) Triple Top Triple Top (TripleTop), also known as the head of the three it is about the formation of three high and turning trend chart patterns, usually appear in the rising market conditions typical triple top, usually appear in a shorter period of time and Another confirmation of the triple top signal can be found in the overall volume when the graph is formed, the volume then decreases until the price rises again to the third high, when the volume begins to increase, forming a confirmation of the formation of the lowest point of the triple top signal, investors usually use it as the main support line, when the price of a double top after falling back to close to the neckline (support level), and then again If the price falls below the neckline, it will slide down sharply and the triple top pattern has been confirmed The above example shows that when the price rises to point A, the trade hovers in this area for about a month or so, but still does not succeed in breaking through the resistance at points B and C because there is no need to do so, the price begins to fall back and falls below the support level of the triple top pattern, confirming the trend toward (4) triple bottom triple bottom (TripleBottom) is the inverse of the triple top pattern, formed in a down market with three points about the low point in the price swing upward, sending a major turn signal compared to the triple top, the triple bottom pattern usually delayed for several months and break through the resistance line Another confirmation of a triple bottom pattern can be found in the volume when the volume decreases during the pattern until the price rises again to the third low, when the volume starts to increase, forming a confirmation of the formation of the highest point of the triple bottom pattern, which investors usually use as the main resistance line, after a double bottom price rallies close to the neckline, and then meets resistance and falls back to the double bottom level. The price fails to fall below this support level, and when it does, volume plummets and begins to rally, volume then increases dramatically when the price rises above the neckline, volume surges after the price breaks through the neckline, the triple bottom pattern has been confirmed The above example shows that when the price falls to point A, trading then hovers in this area for about four months, but fails to penetrate the support levels at points B and C because of oversupply, the price began to rise to some of the previous market highs triple bottom resistance (i.e., the high line on the chart above), as well as then rise through the resistance triple bottom pattern thus confirming the subsequent pullback again to a new support level (i.e., the resistance level of the previous market), but failed to turn into a bullish market, which can more enhance the power of the triple bottom graph 5) Head & ShouldersTop Head & ShouldersTop (Head&ShouldersTop) is As the name implies, the graph is composed of the left shoulder, head, right shoulder and neckline. When three consecutive prices form the left shoulder, the volume must be the largest, while the head is the second, and the right shoulder should be thinner when the price falls below the support line (neckline), there will be a sharp and large drop in volume can act as a head and shoulders pattern. An important indicator, in most examples, the rise of the left shoulder must be higher than the rise of the right shoulder, declining volume combined with a new high in the head can serve as a warning sign that the market trend is reversing horizontally Second warning sign is when the price falls back from the peak of the head, crossing the high of the right shoulder Finally, the reversal signal is after the price falls below the neckline, there is a "backward draw" phenomenon, after the price touches the neckline is still not seen a breakthrough then In most graphs, when the support line is broken, the same support line is transformed into a resistance line in the later market 6) Head & ShouldersBottom Head & ShouldersBottom (Head& ShouldersBottom) follows the down market trend and sends a signal of market reversal As the name implies, the graph is composed of three consecutive valleys with the left shoulder, head, right shoulder and neckline with the middle valley (head) being the deepest. The first and last valleys (left and right shoulders respectively) are shallow and close to symmetrical, thus forming a head and shoulders pattern. Once the price rises through the resistance line (neckline), there is a significant increase in volume which can act as an important indicator for the head and shoulders pattern. The second warning sign is when the price rises from the peak of the head, that is, after the price breaks through the neckline upward, and then falls back to the neckline support level, and then rises sharply Finally, the reversal signal is in the price window upward after breaking the neckline, seize the opportunity to enter the goods, if not followed up, it is expected to appear "after the draw" back to test the neckline support level to buy in most graphs, when the resistance line is broken, the same resistance line in the market after the transformation into a support line & nbsp nbsp; The above graph example, the left shoulder A point formed in a falling and consolidating market conditions neckline from the formation of point A, and then back down about a month, the formation of the head then the price began to rebound to point B again back down, the formation of the right shoulder until the second point of the neckline appeared as a resistance line (i.e., point B) price then rose due to a large number of transactions through the resistance level (neckline), the head and shoulders bottom graph thus confirming the rise through the neckline After the neckline, there may be a drawback, such as not falling through the neckline, the market trend will rise towards the target range from the above example that investors will not necessarily follow the stock that has broken the neckline of the head and shoulders bottom immediately usually, the price will fall back to the support level again (such as point C) to give investors another buying opportunity 7) Rising Wedge Rising Wedge (RisingWedge) is occurring in a large downturn in the market, then rising and trading prices narrow all the way to the bottom. Then rising and trading prices narrow all the way to the rising wedge can be divided into two types of sustained graphics or reversal graphics In sustained graphics, the rising wedge is inclined to slope upward until it meets the current downward trend, while reversal graphics will also be the same upward slope, but the transaction is upward trend regardless of either graphic, this graphic is considered bearish rising wedge is usually delayed to three to six months, and can provide investors with a warning signal market trend A rising wedge is formed with a minimum of two highs, with each points highest and previous highs forming a maximum resistance line; likewise, a minimum of two lows, with each points lowest and previous lows forming a minimum support line. Finally, when the demand completely disappears, the price will reverse back down Therefore, the rising wedge represents a technical sense of the gradual weakening of the situation when its lower limit is broken, is a sell signal The above chart is an example of a rising wedge, the price in mid-July from a falling market began to slowly fall, at point A and B match the new low, respectively, to form a new high but the Relative Strength Index (RSI) shows that the rise from point A to point B between the top backward when the downward sloping line meets the price, the uptrend does not have enough momentum to push the price up, the price then fell through the support line C point, the downtrend therefore continued 8) Falling Wedge Falling Wedge (FallingWedge) is a common pattern that occurs at the top of rising prices in the price of small fluctuations in the finishing During the period, falling wedge can be divided into two types of sustained graphics and reversal graphics in sustained graphics, falling wedge is downward sloping until it meets the current upward trend Conversely, reversal graphics are also downward sloping, but the transaction is downward trend Regardless of either type, this graphic is considered bullish falling wedge is usually delayed to three to six months and can provide investors with a warning that the market trend is reversing falling wedge A falling wedge is formed with a minimum of two highs, with each points highest and previous highs forming a maximum resistance line; likewise, a minimum of two lows, with each points lowest and previous lows forming a minimum support line After a period of rising prices, profit-taking occurs, and although the bottom line of the falling wedge slopes downward, which seems to indicate a weak market, the new falling wave is less volatile than the previous falling wave. Although the bottom line of the falling wedge slopes downward, it seems to indicate that the market is not strong, but the new falling wave is smaller than the previous falling wave, which means that the selling power is weakening, plus the reduction in volume at this stage can prove that the market selling pressure is weakening. Therefore, the falling wedge indicates a technical weakening of the meaning of the situation when its lower limit falls below, is a sell signal falling wedge appears to tell us that the market has not yet seen the top, which is only the normal adjustment phenomenon after the rise Generally speaking, the pattern is mostly upward breakthrough, when its upper limit resistance breakthrough, is a buy signal The above chart is an example of a falling wedge, the price has been down to point A and point B match the new high, respectively, to form two new lows but the moving average backward indicator (MACD) shows that the decline between point A and point B but the bottom backward when the downward sloping line meets the price, the downward trend does not have enough momentum to push the price down, the price then rose through the resistance level at point C upward trend therefore continued 9) RoundingBottom RoundingBottom also known as saucers (saucers) or Bowls (bowls), is a reversal pattern, but not common most of these patterns appear in a long consolidation period from a bear market to a bull market, but in our case, it is a short consolidation period as an example round bottom often appears after a long downturn, the low usually records a new low and back down round bottom pattern can be divided into three parts: down, the lowest and rising pattern of the first part is down: that is, leading the circle The second part is the lowest part of the arc bottom, very similar to the sharp bottom, but not too sharp This part usually appears for a longer period of time or up to a month Finally, the rising part is usually after the graph and about the same time as the falling part If the rising part rises too quickly, it will destroy the whole pattern and become a false signal The whole graph, such as the price has not yet penetrated the resistance level, that is, the beginning of the graph of the falling position; circular bottom pattern can be divided into three parts: falling, lowest and rising pattern of the first part is falling: that is, leading the circle to the low level of the falling inclination is not too excessive That is, the beginning of the falling position of the graph; round bottom is still not confirmed volume usually follows the round bottom pattern: the highest level that is the beginning of the decline, the lowest level that is the end of the decline and rise stronger  (2) sustained form 1) cup handle shape cup handle shape is a sustained upward pattern, it follows the breakout of the upper channel and the formation of a period of finishing time cup handle shape can be divided into two parts: cup and cup handle when the price rises at a certain time, a It looks like a bowl or a round bottom, or like a U shape because the U shape is flatter compared to the V shape, so the cup shape can be identified as a finishing pattern with strong support at the bottom When the cup shape is formed, the short term transaction is the evolution of the cup handle by the cup handle range then breakout and provide a stronger uptrend signal. When the breakout occurs, the volume is clearly up. For example, before meeting resistance at point A, the price was rising less than six months before the cup pattern was formed and met resistance at point B. The price then hovered at the same trading price for about a month before breaking through the resistance, confirming the cup handle pattern. Accuracy because the volume increased before and after the break, representing the emergence of a large number of buyers 2) flag flag pattern is like a flag hanging on the top of the flag, usually in the rapid and large market fluctuations appear in the price after a series of tight short-term fluctuations, the formation of a slightly tilted rectangle with the original trend in the opposite direction, which is the flag trend flag trend is divided into upward flag and downward flag when After a steep spike in price, followed by the formation of a tight, narrow and slightly downward-sloping price concentration area, the highs and lows of this concentration area are connected, you can draw two parallel and downward-sloping straight line, this is the rising flag when the price of a sharp or vertical decline, followed by the formation of a narrow and tight fluctuations, slightly upward-sloping price concentration area, like an upward channel, this is the falling Flag pattern after the completion of the price will continue to move to the original trend, rising flag will have an upward breakthrough, while the falling flag is down to break the rising flag most in the end of the bull market, so suggesting that the rising market may enter the end of the stage; while the falling flag is most in the beginning of the bear market, showing that the market may make a vertical decline, so the formation of the flag is small, about three or four trading days have been completed, but If the end of the bear market, the formation of a longer period of time, and only after the fall can be limited down wedge flag is made of two straight lines moving in the same direction and close, and the two straight lines are in a relatively short period of time to form a flat long triangle wedge more often appear in the center of an upward trend or downward trend, that is, up in the middle of the finishing and down in the process of rebounding escape wave, and most of the volume in the finishing process Gradually reduce, and in the breakout or breakthrough after the volume and significant amplification in the uptrend, wedge flag is from the upper left to the lower right tilt; in the downtrend, it is from the lower left to the upper right tilt, the shape is similar to the flag, rather like the stern of the flag hanging above for the example of the wedge flag, in a rising market conditions, due to a large number of transactions at point A, the flag formed here in the consolidation period of many weeks, the price try In the top of the wedge flag test high (i.e., point B) when penetrating the resistance level, coupled with rising volume, graphic confirmation and uptrend will continue 3) symmetrical triangle symmetrical triangle (SymmetricalTriangle) also known as equilateral triangle, the general situation, symmetrical triangle is a finishing pattern, that is, the price will continue to move the original trend it is composed of a series of price It is composed of a series of price changes, the magnitude of the change is gradually reduced, that is, each change in the highest price, lower than the previous level, and the lowest price than the previous lowest level, a compression pattern, such as from the horizontal direction of price changes in the field, the upper limit for the downward sloping line, the lower limit for the upward inclined line, the short-term high and low points, respectively, connected by a straight line, you can form a symmetrical triangle symmetrical triangle volume, because the more and more Smaller price changes and decreasing, is a reflection of the long and short forces on the market indecisive wait-and-see attitude, and then when the price suddenly jumped out of the triangle, the volume then becomes larger if the price up through the resistance line (must be matched by large volume), is a short-term buy signal; conversely, if the price down below (under the low volume break), is a short-term sell signal above For example, a downtrend emerges when the price flows from point A into a symmetrical triangle and trades hovering in this area trend lines also appear in the next two months (point A to point C and point B to point D) at point E, the price starts to break through the resistance line and tries to turn the trend, but is unsuccessful and becomes a false breakout This is a good example to remind investors that they must wait for the signal after the market closes and pay attention to whether the break is accurate or not A good entry level at point E, the price opened under the trend line, confirming that the previous signal was false subsequently, the price penetrated the lower point of the triangle and a large number of sell orders, which confirms the continuation of the downtrend of the symmetrical triangle 4) Ascending Triangle Ascending Triangle (AscendingTriangle) usually in the connection of the rally highs tend to be horizontal and the low of the return line, gradually pad higher, thus forming an upward slope, and at the end of the finishing pattern, along with the expansion of the attack volume, generally upward breakthrough opportunities are greater price at a level showing strong selling pressure, the price from the low point back to the level will fall back, but the markets purchasing power is still very strong, the price did not return to the last low point will rebound immediately, and continue to make the price with the fluctuations of the resistance line and narrowing day by day if we put each of the Short-term fluctuations in the highs are connected to draw a resistance line; and each short-term fluctuations in the lows can be connected to another upward-sloping line, forming an ascending triangle volume in the formation of the process of decreasing the ascending triangle shows that buyers and sellers in the range of the competition, but the buyers power in the struggle has been slightly dominant sellers in its specific price level continue to sell, not eager to ship, but not However, the buying power of the market is very strong and they are not waiting for the price to fall back to the last low and are eager to buy, thus forming a demand line that slopes up to the right. three months, but did not break through the resistance line B, C and E and the higher lows A point to D point to F point, representing the accumulation and market conditions will continue to rise in the whole process, the volume is weaker than expected, but at F point began to catch up and the price is just restrained by the support line, and then rebounded through the resistance point G, and the volume of G point is very high after the confirmation of the rising triangle pattern, the market will continue to rise  (5) descending triangle descending triangle (DescendingTriangle) usually in the return low point of the line tends to be horizontal while the line of the rebound high point is tilted downward, representing the market sellers power gradually increased, so that the high point evolves over time, the lower the plate, while the lower support of the buying gradually turn weak, retreating to the wait-and-see selling pressure gradually increased, in the buying power turned weak and selling pressure gradually increased In the case of the collation to the end, with the volume of mild amplification, and the price down to break the chances of greater decline triangle shape and the opposite of the rising triangle, the price of a particular level of stable purchasing power, so every fall to the level will rebound, forming a horizontal demand line but the market selling power is constantly strengthening, the price of each fluctuation of the high point is lower than the previous, so the formation of a A downward sloping supply line The descending triangle is also a battle between the long and short sides, but the long and short forces are the opposite of what is shown in the ascending triangle chart above. In the process of forming a descending triangle, the value of volume is weaker than expected, but at point F began to catch up, and the resistance line is also very strong, in the last test of resistance was unsuccessful, the price then retraced and fell through the support level at point G and the volume at point G is also very high descending triangle pattern is confirmed, the market trend continues to fall 6) Price Channels Price Channels (PriceChannels) is Continuation of the graph, its slope tends to up or down, depending on its price transactions are concentrated in the upper trend line or lower trend line upper trend line is a resistance line, while the lower trend line is a support line when the price channel has a downward trend tilt will be considered a down market, while the price channel upward tilt, it is considered an up market to two trend lines formed by the price channel, one called the main trend line, the other is called the channel line main trend line line to determine a strong trend such as up (down) channel up (down) tilt, at least two points of the low point (high point) to form a line and draw another trend line called the channel line, and the main trend line balance of the channel line to the high point and low point drawn in the up channel, the channel line is a resistance (support) line in the down channel, the channel line is a support line when prices continue to rise and fluctuate within the channel When the price fails to reach the channel line (resistance line), a sharp shift in the trend is expected and a subsequent break below the main trend line (support line) provides confirmation that market conditions will reverse. Even if the price does not break through the resistance line (channel line) at points A, C and E, even if the price breaks through the support line consisting of points B and D, the upward trajectory still exists because the highs and lows are gradually rising but finally, point F is too much of a sell-off resulting in a break through the support line. channel down or fluctuating, the trend is considered to be muted when the price is not close to the channel line (or support line), that is, will happen is a trend change such as through the resistance line, representing the current trend will have changes such as through the lower channel, that is, to the muted and continued decline The above chart example, when the price level left the downtrend, the downward channel began to form in the whole period of falling prices, trading can not break through the support level of point A and C point of support (or channel line), even if the price penetrates the resistance line composed of point B and D, the downward track still exists, because the high and low decline although the F point has broken the resistance, but through the G point to really turn into an uptrend when the price does not stretch to the channel line, the E point has issued a warning signal of the trend, indicating that the price continues to be subject to selling pressure 7) rectangle rectangle (Rectangle) ) is also called box-shaped, is also a typical finishing pattern prices rise to a certain level of resistance, turn back down, but soon to get support and back up, but back up to the same high point before but again blocked, and setback to the last low point is then supported these short-term highs and lows are connected up in a straight line, you can draw a channel, the channel is neither upward, nor down, but parallel development This is the rectangle pattern in general, when the market is up and down, smooth rise and fall in the market may appear, long and narrow and small volume of the rectangle in the original bottom more often appear after the breakthrough of the upper and lower limits of the buy and sell signals, up and down usually equal to the width of the rectangle itself when the upward breakthrough of the upper resistance, is a "buy signal" and vice versa, if the downward breakthrough, is a "sell signal" rectangle formation In the process of rectangle formation, unless there is a sudden news disturbance, its volume should be decreasing If during the formation of the pattern, there are irregular high transactions, the pattern may fail When the price breaks through the upper level of the rectangle, there must be a surge in volume to match; but if it falls below the lower level, there is no need for high volume increase after the rectangle shows a breakout, the price often reverses, this situation will usually be in the three days to three weeks after the breakout According to the above chart example, in early May, the rectangle pattern began to form in a down market, it seems that the market has bottomed out, and the volume is also very small until early July, the volume began to increase, clearly showing that the price breakthrough is imminent, the trend to the downward trend continues