INSANE 300 PIP DROP ON GBPJPY!-WHAT REALLY HAPPENED
When analysing my chart I always start by identifying my trend. After identifying the trend I move on to drawing my support and resistance lines starting from the weekly time frame,daily,4 hour then lastly the 1 hour time frame:
-Technical analysts use support and resistance levels to identify price points on a chart where the probabilities favor a pause or reversal of a prevailing trend.
-With support and resistance lines,the the line below current price level is the support level and the line above current p/l is resistance line.
NB:EACH LINE BE IT SUPPORT OR RESISTANCE MUST HAVE BEEN TOUCHED AT LEAST TWICE OR THRICE BY PRICE IN THE PAST
After drawing support and resistance lines I move on to drawing my trendline
-A trend line is a straight line that connects two or more price points and then extends into the future
-When drawing my trendline my first two touches should be perfect starting from wick to wick then extend to the future
Lastly I look for reversal chart patterns
Head and shoulders pattern:
-Usually happens after an extended uptrend.
-Formed by a peak, followed by a higher peak, and then another lower peak. A neckline is formed by connecting the low points of the two troughs.
Descending triangle:
-The Descending Triangle is basically the reverse of an Ascending Triangle. The flat line (horizontal trendline) is on the bottom and a descending trendline defines the top part of the pattern. The two lines come together to form a flat- bottomed, right-sided triangle. The Descending Triangle is a continuation pattern and is generally considered bearish. It is most reliable when found in a downtrend.
In the Descending Triangle, prices drop to a point where they are considered oversold. Tentative buying comes in at the lows and prices perk up. The higher prices however attract more selling and the old lows (horizontal trendline) are re-tested. Buying once again lifts prices, although resulting in a lower high (downward slanting trendline). New selling comes in and pushes it back down. The price will eventually break the support line and continue to fall.
-Consist of lower highs and a support line.
-Usually means that the price will break the support line and go lower
-Technical analysts use support and resistance levels to identify price points on a chart where the probabilities favor a pause or reversal of a prevailing trend.
-With support and resistance lines,the the line below current price level is the support level and the line above current p/l is resistance line.
NB:EACH LINE BE IT SUPPORT OR RESISTANCE MUST HAVE BEEN TOUCHED AT LEAST TWICE OR THRICE BY PRICE IN THE PAST
After drawing support and resistance lines I move on to drawing my trendline
-A trend line is a straight line that connects two or more price points and then extends into the future
-When drawing my trendline my first two touches should be perfect starting from wick to wick then extend to the future
Lastly I look for reversal chart patterns
Head and shoulders pattern:
-Usually happens after an extended uptrend.
-Formed by a peak, followed by a higher peak, and then another lower peak. A neckline is formed by connecting the low points of the two troughs.
Descending triangle:
-The Descending Triangle is basically the reverse of an Ascending Triangle. The flat line (horizontal trendline) is on the bottom and a descending trendline defines the top part of the pattern. The two lines come together to form a flat- bottomed, right-sided triangle. The Descending Triangle is a continuation pattern and is generally considered bearish. It is most reliable when found in a downtrend.
In the Descending Triangle, prices drop to a point where they are considered oversold. Tentative buying comes in at the lows and prices perk up. The higher prices however attract more selling and the old lows (horizontal trendline) are re-tested. Buying once again lifts prices, although resulting in a lower high (downward slanting trendline). New selling comes in and pushes it back down. The price will eventually break the support line and continue to fall.
-Consist of lower highs and a support line.
-Usually means that the price will break the support line and go lower