Aside from technical indicators and Japanese candlestick patterns, another main component of technical analysis is chart formations. Remember that the concept behind technical analysis is that price patterns tend to repeat themselves, which means that these chart patterns more or less result to the same price behavior later on. The sheer number of classic chart … Continue reading Basic Forex Chart Formations
A combination of repeating price patterns with Fibonacci analysis yields another branch of technical analysis known as Elliott Waves. This is named after its founder Ralph Nelson Elliott who analyzed 75 years’ worth of stock data before formulating and compiling his theories in a book entitled The Wave Principle. He discussed how price movements are … Continue reading Elliott Wave Analysis 101
Harmonic price patterns comprise another set of chart formations involving Fibonacci retracement and extension levels. The rule of thumb in trading these patterns is to wait for the entire formation to be completed before entering any long or short positions. There are six main kinds of harmonic price patterns, namely the ABCD, the three-drive, the … Continue reading Understanding Harmonic Price Patterns
As you've learned in the previous sections, technical indicators and price action tend to move in tandem. For instance, when stochastic starts heading lower from the overbought zone, the corresponding currency pair usually sells off. On the other hand, stochastic climbing out of the oversold area indicates that the currency pair could rally. There are … Continue reading How to Trade Divergences
While using a combination of technical indicators can help confirm price movements and filter out false signals, most traders opt to conduct multiple time frame analysis for additional confirmation. This method simply involves looking at the same currency pair across various time frames, from the short term 15-minute to the long-term daily or weekly charts. … Continue reading Using Multiple Time Frame Analysis
