Analysis
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Technical analysis figures and candlestick patterns are often used by traders both as an independent form of analysis and as a supplement to other forecasting techniques. This course of lectures can be useful for both novice traders and experienced masters. I would like to start this series with the reversal candlestick patterns "Hammer" and "Hangman". Description of the "Hammer" and "Hangman" reversal candlestick patterns The "Hammer" and "Hangman" candlestick patterns consist of one candle. They have long lower shadows and small bodies, located at or very close to the top of the daily trading range. The "Hammer" candlestick pattern occurs on a downtrend and is so named because it forges the bottom, and the Japanese word "tonkachi" for this pattern,...
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Fundamental analysis distinguishes various factors influencing the exchange rate. At the same time, the degree of their significance for the justification of market fluctuations is different. Thus, at the end of the last century investors carefully monitored the indicators of money supply and budget deficit, in the first half of this century they gave way to the state of the trade balance and the dynamics of interest rates, at present the attention of the world community is focused on the external debt and the volume of government lending. Nevertheless it should be taken into consideration that all fundamental factors are closely connected to each other. In order to predict the dynamics of exchange rates in the mid- or long-term perspective it is necessary to understand this interrelation. The interest rate differential can help.
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Price figures are often used by traders in technical analysis both as its independent type and as addition to other forecasting techniques. This course of lectures can be useful both for beginners and experienced traders. I would like to begin this series with reversal candlestick patterns - "Hammer" and "Hangman". Fig. 1. Reversal candlestick patterns: "Hammer" and "Hangman" (Kanazuchi/Tonkachi and Kubitsuri). Description of the reversal price patterns "Hammer" and "Hangman" The Hammer and the Hangman consist of one candle (see Fig. 1). They have long lower shadows and small bodies that are at or very close to the top of the daily trading range. The hammer occurs on a downtrend...
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The candlestick model "Spike" is characterized by a strong signal of change in the trend direction, so it is referred to the reversal patterns of technical analysis. The "Spike" candlestick pattern is formed after a strong, almost sheer movement up or down, and the same sharp, impulsive movement in the opposite direction. Because of this, a pattern with a sharp end is formed on the price chart, which is called "Ship". As a rule, the price movements in either direction are quite fast and characterized by long candles without zones of consolidation at the bottom or top. Trading with the candlestick pattern "Spike" When the candlestick pattern "Spike" appears on different timeframes, it is recommended to open a position already after the formation of a wedge in the...
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The Doji Star candlestick pattern is a warning that the current trend is close to a reversal. In order to state the appearance of this price pattern, it is necessary to form a candle with a long body, the color of which reflects the current trend. Further, the next day the opening and closing prices should be equal. Such weakening for the current trend is a cause for concern. A perfectly defined doji star signal is an excellent example of the use of the Japanese candlestick chart method. The signal would not be so clear, if we used another method of graphical analysis. Fig. 1. Graphical example of bearish and bullish Doji stars Rules for Doji Star Model Formation To summarize the above: The first day is long. The second day is Doji.....
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One of the strongest trend reversal patterns is the Head and shoulders pattern. It may be formed both in an uptrend and in a downtrend, in which case it is called an inverted head and shoulders pattern. According to the name, this figure has two shoulders and a head, which is higher than the shoulders. In the picture we see that the price reaches the top and rolls back to the level of support, which is the first left shoulder, after crossing resistance (it is slang for "neckline"). Then the price turns around and renews the maximums, after which it rolls back to the support level again. Then the last growth attempt takes place, which turns out to be...
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The Triple Top and Triple Bottom reversal patterns have the same economic sense of formation as Double Top and Double Bottom, with the only difference being that price attempts to break through a certain level three times to continue the direction of the original trend. Triple Top" pattern formation The Triple Top reversal pattern formation mechanism is as follows: price gets over the resistance level, which then becomes support, and starts growing up to new resistance. Having reached it, the price rolls back to the support and tries to grow again, but in the area of the first summit it cannot overcome it and rolls back. After that, unlike the double top, the price doesn't sell off, but makes efforts...
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"Bowl" is a rather interesting price reversal pattern in terms of its construction. It is formed less often than other reversal patterns, but that does not make it less effective. Let's consider an example of the uptrend with formation of the "Inverted Bowl". The trend moves upwards progressively with the formation of new peaks (highs). When the price reaches certain values, it begins to slowly "slide" downward without forming new tops. Once the price overcomes several support lines, it begins to gather momentum and speeds up its fall. Inverted Bowl" candlestick pattern trading signals The entry point of the "Inverted Bowl" pattern of technical analysis can be determined by various methods - with the help of volumes, Fibo levels and so on. Also one of...
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Like other types of graphical triangles ("Pennant", "Wedge", etc.), the figures of technical analysis "Upward Triangle" and "Downward Triangle" are more price models of continuation of the trend, rather than reversal patterns. Trading signals of technical analysis figures "Triangles - ascending and descending" The distinguishing feature of ascending and descending triangles from symmetrical and expanding triangles is the presence of a clearly defined horizontal support line (in a descending triangle) or resistance (in an ascending one). In the ascending triangle price pattern, there is a pattern of gradual decrease in the waves-corrections after the price rebounds from the horizontal resistance level. After the breakdown of this level, the price moves towards the main trend at a distance equal to the height of the triangle base. In the "Downtrending Triangle" pattern.
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The figure of technical analysis "wedge" is similar to the price models "Vympel" and "Triangle" by its form and time of formation. But still "wedge" has its own features: - In contrast to the figure of "Vympel", "Wedge" does not have a pronounced preceding trend. - After the price leaves "Klin" consolidation zone, when breaking through the price pattern it is impossible to detect the final destination of the price movement, we can only speak about the continuation of the initial trend. - Another distinctive feature of the "Wedge" price pattern is its more noticeable slope angle to the main movement. It means the correction pullback, following the logic of the "wedge" will be deeper than, for example, for "Pennant" or "Flag". Thus.
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Price pattern "Rectangle" is a classic example of price consolidation in a narrow range before further market movement in the chosen direction. Rectangle" price pattern, located in the consolidation area, as a rule, has clear and pronounced horizontal support and resistance levels (without updating of maximums and minimums). In the stock markets such price pattern appears at the moments when traders and investors expect the release of important news, the results of which they doubt. After the publication, confirming the expectations of speculators, they continue to move the price in the previously chosen direction. Working out of the technical analysis pattern "Rectangle" After breaking through the resistance level in the bullish price pattern "Rectangle" the price passes the distance equal to the height of the rectangle. In a bearish price pattern...
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The figure of technical analysis "Pennant" is a frequent model of continuation of a trend on various stock exchanges, including . In its essence, "Pennant" is similar to the continuation pattern "Flag" with the only difference that it has the form of a converging triangle. This figure of technical analysis is a corrective movement with a narrowing range after a strong trend up or down. In fact, this is a period of fixing profits before a new breakthrough in prices. Trading signals of the figure of technical analysis "Pennant". If the trend is ascending, the algorithm of working with the figure "Pennant" is as follows: when breaking through the resistance line we open a long position with Stop-Loss just below the minimum point of correction and the potential target, equal to the movement of the initial trend is up. At.
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The technical analysis pattern "Flag" appears on price charts frequently and on almost all timeframes. It can be identified both on five-minute candles and on the weekly chart. The "Flag" pattern most often emerges after a strong price movement of the selected asset in one direction and represents a narrow consolidation zone, usually in the opposite direction from the initial impulse. The components of the figure of technical analysis "Flag" In the figure "Flag" distinguish: "flagpole" - the initial price impulse, and the "flag" itself - consolidation, a narrow price channel bounded by support and resistance levels. In most cases the length of "flag" is one third of the length of "flagpole". Trading signals of the technical analysis figure "Flag" Technical analysis figure...
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One of the most controversial graphical figures of technical analysis of the continuation of the trend on , are triangles. In fact, triangle shapes are similar in their construction to "Pennants" and "Flags" but without the initial upward/downward movement. Technical Analysis Trading Signals Symmetrical Triangle What is a symmetrical triangle and how is it formed? When the bulls and bears are in equilibrium in the market, and volatility gradually subsides, the price is "clamped" in a narrow range. We can make a symmetrical triangle with at least two points of lows and two points of highs in this narrowing formation. As a rule, a symmetrical triangle pattern will look like two converging support and resistance lines. After breaking through a narrow range and tapering...
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Like other types of graphical triangles ("Pennant", "Wedge", etc.), the figures of technical analysis "Upward Triangle" and "Downward Triangle" are more price models of continuation of the trend, rather than reversal patterns. Trading signals of technical analysis figures "Triangles - ascending and descending" The distinguishing feature of ascending and descending triangles from symmetrical and expanding triangles is the presence of a clearly defined horizontal support line (in a descending triangle) or resistance (in an ascending one). In the ascending triangle price pattern, there is a pattern of gradual decrease in the waves-corrections after the price rebounds from the horizontal resistance level. After the breakdown of this level, the price moves towards the main trend at a distance equal to the height of the triangle base. In the "Downtrending Triangle" pattern.
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The figure of technical analysis "wedge" is similar to the price models "Vympel" and "Triangle" by its form and time of formation. But still "wedge" has its own features: - In contrast to the figure of "Vympel", "Wedge" does not have a pronounced preceding trend. - After the price leaves "Klin" consolidation zone, when breaking through the price pattern it is impossible to detect the final destination of the price movement, we can only speak about the continuation of the initial trend. - Another distinctive feature of the "Wedge" price pattern is its more noticeable slope angle to the main movement. It means the correction pullback, following the logic of the "wedge" will be deeper than, for example, for "Pennant" or "Flag". Thus.
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Price pattern "Rectangle" is a classic example of price consolidation in a narrow range before further market movement in the chosen direction. Rectangle" price pattern, located in the consolidation area, as a rule, has clear and pronounced horizontal support and resistance levels (without updating of maximums and minimums). In the stock markets such price pattern appears at the moments when traders and investors expect the release of important news, the results of which they doubt. After the publication, confirming the expectations of speculators, they continue to move the price in the previously chosen direction. Working out of the technical analysis pattern "Rectangle" After breaking through the resistance level in the bullish price pattern "Rectangle" the price passes the distance equal to the height of the rectangle. In a bearish price pattern...
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The figure of technical analysis "Pennant" is a frequent model of continuation of a trend on various stock exchanges, including . In its essence, "Pennant" is similar to the continuation pattern "Flag" with the only difference that it has the form of a converging triangle. This figure of technical analysis is a corrective movement with a narrowing range after a strong trend up or down. In fact, this is a period of fixing profits before a new breakthrough in prices. Trading signals of the figure of technical analysis "Pennant". If the trend is ascending, the algorithm of working with the figure "Pennant" is as follows: when breaking through the resistance line we open a long position with Stop-Loss just below the minimum point of correction and the potential target, equal to the movement of the initial trend is up. At.
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The technical analysis pattern "Flag" appears on price charts frequently and on almost all timeframes. It can be identified both on five-minute candles and on the weekly chart. The "Flag" pattern most often emerges after a strong price movement of the selected asset in one direction and represents a narrow consolidation zone, usually in the opposite direction from the initial impulse. The components of the figure of technical analysis "Flag" In the figure "Flag" distinguish: "flagpole" - the initial price impulse, and the "flag" itself - consolidation, a narrow price channel bounded by support and resistance levels. In most cases the length of "flag" is one third of the length of "flagpole". Trading signals of the technical analysis figure "Flag" The figure...
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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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