Hello friends merchants!
said that history is cyclical and all the events of history are repeated.Is it so?Today, the theme of this lesson will be the use of technical analysis in forex trading.
Technical analysis - the ability to predict price movements based solely on an analysis of the historical movement of the price chart.The history taught in school - speculative, the price history is an absolute postulate.
Forex Price movement formed the basis of a variety of multiple factors.Embracing together that it is impossible for even the most discerning professional.No trader is not able to analyze every transaction is made on the Forex market.Accordingly, the trade periods are divided into equivalent timeframes - the time intervals in the range which does not analyze each transaction price, but only the five most significant: the opening of the trading period, the closing of the trading period, a minimum period of a maximum period, and the amount.
Based on the foregoing, we conclu
Unbreakable rules of technical analysis
Prices take into account all
Numerous factors outside world will eventually have an impact on the price, and ultimately affect the outcome - the price chart.In today's trading, there is practically no difference in time between the news event and consequence - the reaction of the price for it.Traders who use technical analysis suggests that there is no need for analysis of the news coming in your trading.All that matters is the historical value of the price.Trader It's enough to make profitable trading.
Prices are subject to trends
market is always in motion, prices move up or down.In between the market price movements of the present state of the flat - non-directional lateral movement.
market's reaction to certain situations in the past and the market movement on these reactions will be similar in the future.
is believed that the founder of the technical analysis was Charles Dow.In his writings, he outlined some of the rules by which you can make transactions with the least risk.
idea of price data
totality of all information about transactions may be displayed on the graph line forming the line will be a point of information about each completed trade deals.This schedule is called linear, but given time interval, this schedule will be named teak.
tick chart - a special kind of a schedule containing the information about all the transactions made on the trading instrument.From the position of the depth of the display array of transactions data, tick chart is the most detailed.Features tick chart analysis are severely limited, particularly if it shows the liquid trading tools.The volume of transactions on a tick chart can be tens or hundreds of thousands per day.The volumes of data on a scale difficult to handle, even with supercomputers.This information is for use technical analysis to tick charts becomes extremely excessive.it was decided to data on price and volume to accelerate the processing of information not be applied for each transaction, and the complex - a common result and bind to a certain period of time - timeframe.
Timeframe - the time interval is divided into time periods of equal length.Each time interval includes 5 basic values: the price start time period, the price of the end of the time period, the minimum price achieved in the time period and the maximum price reached in this time period, the volume.
Initially, the analysis of trading instruments used line graphs.The line graph can not display the minimum and maximum price attained in a given time interval.That is why the traders began to use graphics built using Japanese candlesticks.
Candlesticks - a recognized global standard display of the dynamics in the price chart.To build a Japanese candle we need 4 points: Connect the line reached the price highs and lows in the reporting timeframe, draw a rectangle from the opening price of the period prior to the closing price of the shaded or empty.If the price is increased then the rectangle will be empty if the price dropped it hatched. Rectangle - this body candles.The line between maximum and minimum is called the "shadow candle" or "studs".
volume is plotted often at the bottom of the price chart and displayed in the form of columns, portrayed one for each candle in relation to it.
In technical analysis, the most common are the following timeframes: 1 minute (M1), 5 minutes (M5), 15 minutes (M15), 30 minutes (M30), 1:00 (H1), 4:00 (H4)day (D1), week (W1), month (MN) .
Almost all trading platforms support these timeframes and most of the trading systems operated by these timeframes.
taymfreyma The choice is individual.Taymfreym usually depends on the pace of trade, as well as determines the trader's involvement in the trade.The image on the screen shows the graphs of the same instrument, but for different taymfreymy.On the daily chart shows a growing candle.This schedule does not allow to make a single transaction in the interval of the trading day.But on 30 minutes taymfreyme we see an upward trend with all the elements inherent in it, trading in which we can make trades during the day.
intensity of trading and time frames are shown in the table below.
Rules of the timeframe
Rule №1 track every new candle.Ie taymfreyma for 30 minutes is necessary to monitor the terminal 1, every 30 minutes, for 1 hour taymfreyma - 1 times per hour.
Rule №2 When using trading systems for example, 1 hour, you must be strict on this taymfreyme, in the case of moving to senior or junior taymreymy your trading system may stop working.
market is always moving in any particular direction.The direction of movement is determined by the mood of market participants.market condition is defined by two phases: there is a trend (upward or downward) and there is no trend (Flete)
uptrend - formed by alternating several local maxima.Each successive maximum must be higher compared to the previous.Also there is a series of lows, the next of which is higher than the previous.The inability to overcome the last price peak, indicates a weakening trend and warns about its end.Falling below the recent low suggests the beginning of a possible trend reversal.
If the uptrend could not overcome the recent high and could not turn around and go the previous minimum, with a high probability of Flete began.
downtrend - formed alternation of local minima.Each following minimum must be lower compared to the previous.Also there is a series of highs, the next of which is lower than the previous.Failure to overcome the previous price at least, indicates a weakening trend movement and warns about its end.Height above the last peak suggests the beginning of a trend reversal.
If the falling trend could not overcome the last minimum and could not turn around and go through the previous high, then a high probability of Flete began.
Depending on whether or not the trend in the market in front of us can stand the following tasks.
If there is a trend:
- To what price trend to continue;
- To what price correction will occur without a change of trend;
- Trend ended?Are there any signs?- Perhaps the most difficult part in those.analysis.
the presence of the flat:
- Corridor Fleta values;
- Does the width of the flat range and whether it makes sense to make transactions on its borders?
Support and resistance
watching the price chart, we can see it on some points, which can sometimes be built in the form fields.These terms arise from the price reaches certain hidden areas - levels.Price may slow down when approaching these zones, and sometimes repelled by them, and begins to move in the opposite direction.If such a movement were observed on our chart above, it is likely they will occur in the future.
support level - decided to build a multi-point of local minima, which we can observe in the past before.These points must be located within the same horizontal level prices.Support necessarily be located on the chart below the current price of the trading instrument.
resistance level - decided to build a multi-point of local maxima, which we can observe in the past before.These points must be located within the same horizontal level prices.Support necessarily be located on the graph above the current trading price of the instrument.
breakdown level - to overcome the price level and strengthening him.Often, this event marks a change in trend.
levels on the chart, especially in younger taymfreymah be set.If the level of repeatedly tested price movement, that is, was built at least three points, its breakdown is more significant.
Inability to break the level also increases its value in the chart.If there is a strong trend level may be sufficient obstacle to correction or even a reversal of the trend reversed.
To identify strong level should be the rule of three touches this level, optimally from all sides.
determine whether possible that trend has ended or is still continuing? try to use graphic reversal patterns and continuation.
Reversal patterns - quite a subjective chart patterns, the formation of which the graph can mean change in trend.The most popular models are the reversal:
- double top;
- triple top;
- head - shoulders;
- reverse head - shoulders;
- double bottom;
- triple bottom.
all reversal patterns are conceptually similar to each other, if they are regarded as the concept of market behavior.
models continue - it is less subjective with respect to the figure reversal patterns, the formation of which the graph is likely to continue the trend.
popular models are the continuation :
- variety of triangles;
With the development of computer technology in the technical analysis developed internal auxiliary direction - indicators of technical analysis.
Graphic technical analysis - the first phase.analysis arose prior to the development of computer technology.Charts feature of hand on graph paper.Traders have been limited to simple visual analysis of graphs.With the development of computer technology the opportunity to analyze the price movement by the use of mathematical indicators, and more showcase mild mood of market participants.Despite this, the indicator technical analysis was not able to displace a graphical technical analysis.Both technical analysis of the type of data used by traders all over the place.
There is a third more rare type of analyzing the volume indicators.
universal indicator for all does not exist.So often all trading strategies are based on two - three indicators.
Technical analysis - certainly one of the two most important areas of market analysis.Leading trade using technical analysis in any case can not forget about the foundation.
In our today's lesson, we have examined the main directions for the study of basic technical analysis.For each of these areas you will find a more detailed lessons on our website.