Analysis
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"Cup with handle" in technical analysis is a trend continuation pattern. This pattern was introduced and popularized by the famous American trader William O'Neill and came to the foreign exchange market from the stock market. The appearance of this candlestick pattern is really reminiscent of a cup of coffee or tea, which probably every trader has next to the keyboard. It should be noted right away that the "Cup with a pen" is a continuation pattern only for an uptrend. Let's break down the conditions for the emergence of this candlestick analysis pattern, ways to use it in trading, as well as some features. The most important condition for the formation of a "Cup with a Handle" trend continuation pattern is the presence of...
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A "bow tie" trend reversal pattern is not an ordinary pattern, as it is based not on a repeating stable price pattern with a predictable development, as in most widely used patterns, but on a model formed by technical indicators. More precisely, it is a pattern formed by the intersection of three moving averages. Exactly this feature gives the "Bow Tie" pattern one very important advantage - it's the ability to easily and unambiguously determine this pattern, which is especially important for beginners who do not have much experience with patterns. We can consider the "Bow Tie" pattern as an example of a trading strategy using moving averages. Rules of constructing "Bow Tie" pattern The "Bow Tie" pattern owes its name to the intersection of...
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If you are new to trading and read analytical tapes, fundamental analysis can seem like a set of highly subjective conclusions and assumptions of analysts. Often experts hold diametrically opposed views on the same events, juggling information as they see fit to justify their own position. Meanwhile, an analysis based on clearly defined and verifiable rules can be called objective. Even if those rules are based on fundamental analysis, they can be objective and thus verifiable. For example, "buy when interest rates rise, sell when interest rates fall" is quite an objective rule, while the idea of technical analysis "buy on an uptrend and sell on a downtrend" smacks of subjectivity in...
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Under normal economic conditions, rational investors choose assets that bring high returns, but in the era of instability the determining factor in choosing trading instruments is their reliability rather than profitability. This is why there are the following types of currencies on the currency market: shelter currencies and high-yielding currencies. Let us try to figure out what factors influence the dynamics of these types of currencies and how to predict them. Sanctuary currency for investment preservation Sanctuary currency, or in other words, a safety currency, is a type of currency that strengthens during periods of anxiety and market uncertainty, when investors seek to preserve their savings. Currencies of countries characterized by political and economic stability, low inflation and confidence in the central bank are considered safe...
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Head and shoulders is a classic figure of technical analysis, which signals the reversal of the current trend. The Head and shoulders figure exists in two variants: "Head and shoulders" - for an uptrend, inverted or reversed head and shoulders - for a downtrend. It should also be noted that Double Top and Triple Top are the special cases of Head and Shoulders figures. It should be noted that in spite of the fact that this figure is a classic one, its formation is rather conventional. It means that different traders may build the same Head and shoulders a bit differently depending on chosen timeframe and their understanding of currency mechanisms.
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Under the conditions of the global fall in quotations on stock exchanges and commodity prices, the attention of investors is increasingly attracted to the debt market, the dynamics of which has a direct impact on the change in exchange rates in the international market FOREX. To understand the mechanism of how government bond yields influence currency quotes, it is necessary to refer to the basics of fundamental analysis. State credit and bond yields The activity of any state in the financial sphere is characterized by budget deficit or surplus. In the first case, the country's expenditures for various purposes exceed its income in the form of taxes or non-tax payments, which forces the use of public credit in order to cover the difference between them. The main form of public credit in...
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The economic calendar and planned economic events and news increase volatility on the currency market and often cause unfortunate failures for "technical" traders. We advise to follow the economic statistics releases even to the most ardent opponents of the fundamental analysis and trading on the news: forewarned is forearmed. Below you can find the most important economic releases during the month for the key currencies. Economic Calendar for the US Dollar (USD) America starts the month on the foreign exchange market with the manufacturing and non-manufacturing PMI from ISM (the first and third day of the month, respectively). The first Wednesday of the month is NFP by ADP (non-farm payrolls) .....
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Fundamental economic factors and trading on the fundamental analysis of the Forex market is not an abstract concept. Every day traders encounter events in the form of news published in the economic calendar. Economic indicators are issued in the form of reports at a set time (weekly, monthly, quarterly). Approaches to using the economic calendar by a Forex trader There are different approaches to using the economic calendar in the market. Some traders trade "on the news", i.e. they open positions according to their expectations of a changing economic indicator (for example, growth of GDP in the Eurozone is expected - they buy Euros). Others, on the contrary, avoid the news, as trading on them involves some risk. Such traders prefer to wait for the market to "digest" the news,...
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There has been no more urgent topic in recent times than the imposition of economic sanctions. At the same time, few understand the forms, methods and goals of these sanctions. Restrictions always affect both sides, affecting the economy, the business climate and consumer sentiment. Figuratively speaking, sanctions are a weapon that shoots at both sides. Economic sanctions - concept and objectives Economic sanctions are measures of an economic nature applied by one or more countries against another country or group of countries. Economic sanctions can take the form of complete or partial bans on imports of goods from or exports to a country as well as restrictions on financial transactions. The purpose of...
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It is possible to make money in the Forex currency market with the help of various strategies. Some traders develop trading systems based on technical analysis, others stick to fundamental views. Someone combines both types of analysis and tries to realize an ideal model. For the last several years trading robots based on certain algorithms are gaining popularity. But there are some traders who trade only on the Carry Trade strategy. What is this trading tactic and what are the pitfalls? Let's consider it in details. Carry trade is the game based on the difference of interest rates of central banks Carry trade enjoys great popularity among both non-professional participants of the currency market and institutional investors. This can be explained by...
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Паттерн «Дракон» – одна из «экзотических» разновидностей разворотных фигур на рынке и, если быть точным, представляет собой более модифицированную разновидность фигуры «Двойное дно, при этом сигнализирует о смене медвежьего рынка на бычий. Соответственно, «Обратный Дракон» формируется при окончании растущего тренда и начале снижения рынка. Сигналы обратного паттерна аналогичны сигналам при формировании фигуры «Двойная вершина». Как же происходит формирование паттерна «Дракон» на ценовом графике? Паттерн «Дракон» образуется на падающем рынке. Его формирование начинается с Головы (1). Она представляет собой локальный максимум от повышающей коррекции на падающем рынке. После формирования Головы паттерна Дракон, рынок продолжает снижение, в результате которого на ценовом графике…
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Замечали ли вы когда-нибудь, что некоторые валютные пары движутся в одинаковых направлениях? Например, пара NZD/USD в большинстве случаев повторяет траекторию движения пары AUD/USD. Это явление называется «корреляция». Итак, валютная корреляция – мера взаимной зависимости двух валютных пар. Коэффициент корреляции представляется в десятичном формате и варьируется в диапазоне от +1.0 до -1.0. Корреляция +1 (положительная, прямая) означает, что две валютные пары 100% времени движутся в одном направлении. Корреляция -1 (отрицательная, обратная), наоборот, означает, что две пары 100% времени движутся в противоположных направлениях. Нулевая корреляция означает, что две пары никак не зависят друг от друга. Наиболее яркими примерами пар, имеющих прямую корреляцию,…
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In the last issue of ForTrader.org, we learned about the general fundamental factors that cause exchange rates to move. Now we will take a look at the specifics inherent to specific currencies. To begin with, it is worth mentioning that currencies are divided into "shelter currencies" and "risky currencies" in terms of how investors view risk. Refugee currencies strengthen during times of market anxiety and uncertainty as investors seek to preserve their assets. Risky currencies are the currencies of commodity-exporting countries. The demand for them grows during the periods of relative stability in the world economy and politics. Indicators of investors' appetite for risk can be seen in the dynamics of global stock markets (growth points to the appetite for risk, decline - the aversion of investors to risk). Now let us turn to...
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Forex market analysis is divided into technical and fundamental. Technical analysis relies solely on the price chart and shows what is and has been happening in the market. Fundamental analysis explains what fundamental, or in other words, economic factors caused the price movement. Traders who want more than "buy on the green and sell on the red" must understand these factors. We will begin our master class with a general overview of the fundamental factors. In the following issues, you will learn how to use them in trading for maximum efficiency. Economic Indicators In general, a currency can rise in value for two reasons - if its supply (volume in circulation) in the world market decreases, or if...
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The saying "If you hurry, you make fun of people" also applies to the stock market. Let me illustrate it with a live example. Sberbank's living "head" At the moment, a figure is forming on the chart of Sberbank's ordinary shares, which looks like an inverted "Head and Shoulders". Other articles of the master class "Stock Market. The pattern "Diamond" or "Rhombus": a dangerous signal for a trader The pattern "expanding formation" teaches not to relax A little more about TA figures: "triangle" or "head and shoulders"? "Flags" and "pennants": peculiarities of analyzing the figures Should we be tempted by heavily depreciated Russian shares? Despite the fact that the figure has not yet completed the drawing of its second "shoulder", not to mention the breakdown of the "neck line",...
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As I promised last time, today, within the framework of studying the classical technical analysis for the stock market, I will tell you what happens when the insidious figure "expanding formation" merges with the equally insidious figure "symmetrical triangle". Although it's simple: a rare and little-studied trend reversal pattern, the Diamond or Rhombus, appears on daily slices of Russian stocks. The "Diamond" pattern is strange, as the process of its formation takes a long time. Russian stock quotes are too emotional to stay in limited ranges for a long time. In the literature on classical technical analysis, you can see not only the conditions of formation and description of the Diamond or Rhombus figure, but also learn that, according to...
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Last time we discussed the magic of the Triangle pattern on the daily charts as part of our study of the application of technical analysis to Russian securities. In this article, I'm going to tell you what happens when a triangle starts to build from the "apex" instead of the "base" and forms into an "Expanding Formation" pattern. As usual, I'm not going to rewrite the book's wisdom, rather we'll immediately compare the theory with reality. The Expanding Formation pattern is not for speculation! You don't have to go far to get an example of the Expanding Formation pattern. It is on the daily chart of the most popular Sberbank stock from the beginning of 2013. The mistake many traders make is trying to trade on the basis of this pattern. On the...
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According to the plan of our training course, we should move on to the study of technical indicators and their application, but the other day I came across an interesting chart that makes me return to the topic of classical technical analysis and, in particular, to the model of uncertainty - the "Triangle" pattern. The reversal power of the "Symmetrical Triangle" pattern Analysts and stock coaches are often accused of showing only historical summaries. Today we have the opportunity to observe the technical analysis figure "Triangle" in dynamics. In free access you can find articles substantiating the reversal power of the "Symmetrical Triangle" figure for Russian popular securities. I "made friends" with these figures long ago, back in December 2007.....
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Let's continue to get acquainted with graphical technical analysis. Last time we talked about big formations - trend reversal patterns. Today I will tell you about the peculiarities of trend continuation patterns - "Flags" and "Pennants". Figures "Flag" and "Pennant". - Uncomfortable sideways The "Flag" and "Pennant" figures can be formed both after a rise and after a fall. There is often a question about the interpretation of these figures of technical analysis, because it is easy to confuse them in the process of their formation. I never try to determine on a live chart in the moment, which is forming now - the "Flag" or the "Pennant"? I start from the philosophy of formation of these figures. "Flag" or "Pennant" - is a tedious little sideways pattern in which...
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One of the most recent harmonic patterns that have been discovered relatively recently is the "5-0" harmonic pattern. С. Kornei published the first materials on this development in 2004-2005. This pattern, as well as all its "colleagues", can be used absolutely on any markets because of its construction on the basis of Fibonacci levels, which describe almost everything in this world. Description of the harmonic pattern "5-0" Let's describe the main characteristics of the pattern: the formation of the pattern "5-0" begins with a weak movement in the form of the AB segment at the end of the previous bearish trend. The point B should be located not above the level of 161.8% from the movement 0X. The impulse BC relative to the segment AB should be organized in the range from...
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