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Technical Analysis

Advanced Camarilla Concepts (1)Exploring Advanced Camarilla Concepts: The Strategic Role of Pivot Width In the realm of technical analysis, understanding the nuances of pivot points, particularly within the Camarilla framework, can significantly enhance a trader's ability to forecast and capitalize on market movements. A key aspect often overlooked is the analysis of pivot width, especially the width between the third layers, S3 and R3, which offers crucial insights into impending market dynamics. Pivot Width Analysis: Decoding Market Behavior Pivot width, the distance between significant Camarilla support (S3) and resistance (R3) levels, is a powerful indicator of potential market behavior. The interpretation of pivot width can be categorized into two distinct scenarios: Abnormally Wide Pivot Widths: When the distance between S3 and R3 is unusually large, it often indicates that the market might enter a period of trading range activity. In such scenarios, the market is less likely to exhibit strong directional momentum, and instead, traders might experience extended periods of consolidation. This setup requires strategies that capitalize on range-bound trading techniques, where buying at support and selling at resistance can be particularly effective. Abnormally Narrow Pivot Widths: Conversely, a tighter than usual gap between these pivot points typically signals the potential for breakout and trending activities. Narrow pivot widths suggest that the market is coiling, much like a spring, ready to release significant energy that could lead to strong directional moves. Traders should prepare for breakout strategies during these conditions, anticipating substantial moves away from the pivot line once a breakout occurs. Strategic Application in Trading Understanding and applying pivot width analysis within the Camarilla framework allows traders to adapt their strategies based on anticipated market conditions. By aligning trading approaches with pivot width signals, traders can enhance their tactical execution and improve the probability of success in varying market environments. For Wide Pivots: Implement range-bound strategies, focusing on capturing the oscillations between the defined support and resistance levels. For Narrow Pivots: Prepare for potential breakouts by setting entry points near the anticipated breakout levels, with appropriate stop-loss orders to manage risk effectively. Conclusion: Enhancing Trading Acumen with Pivot Width Analysis The study of pivot width in the context of Camarilla pivots offers a sophisticated tool for traders aiming to refine their market analysis and execution strategies. By paying close attention to these details, traders can better prepare for the market's next moves, whether they point to a continuation of the range or the start of a new trend. Stay tuned for further insights into the application of Camarilla pivots in trading, as we continue to explore deeper layers of this powerful analytical tool. This exploration not only enriches your trading toolkit but also enhances your ability to navigate through complex market landscapes.
CBOT:ZNZ2024Education
by msrozba
A Guide on How to Stay on the Right Side of Market RiskStaying on the right side of the market is the only thing that matters in investing. The goal is simple: be long the things that go up and avoid the things that go down. Although this sounds straightforward, investors often focus too much on the upside potential and forget about the downside. In reality, avoiding the downside is by far the most important factor that will have the biggest impact on your total returns. This is because a -50% loss will always require a +100% gain just to break even. Step 1: Follow the Trend The most effective method to stay on the right side of the market is by following the trend, primarily through moving averages. The two most common types are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA). The EMA assigns more weight to recent price movements, making it more responsive and effective for signalling the start of a downtrend, while the SMA offers a clearer view of the longer-term trend. The simplest way to construct a trend-following indicator is to combine a short-term EMA with a long-term EMA. A buying signal is triggered when the short-term EMA crosses above the long-term EMA, and a selling signal is triggered when it crosses below. This systematic approach ensures clear and actionable signals. Optimizing this strategy involves backtesting various EMA combinations to strike a balance between minimal trading frequency, lowest maximum drawdown, and highest profit factor. It’s also crucial to select assets that have historically adhered to trends, as these are more likely to continue doing so. Assets that typically adhere to trends, such as cryptocurrencies, fiat currencies, commodities, and tech stocks, are often driven by speculative or uncertain future expectations. By incorporating a longer-term SMA and adding a safety margin to the calculation, you can help minimize false signals from the EMAs. It’s advisable to compare asset performance not only against the USD pair but also against the safest investable asset in the selected asset class. This comparison helps determine if the additional risk is worth taking. Step 2: Draw the Lines Trend-following strategies are effective only with a clear market trend. Without it, prices may exhibit range-bound movements and generate false signals. Drawing trend lines and identifying horizontal support and resistance levels are crucial for enhancing the accuracy of these signals. The most reliable entry points typically follow a confirmed breakout from these lines, with older lines often indicating more significant breakouts. When drawing trend lines, it’s crucial to use both normal and logarithmic chart scales. The most reliable trend lines appear consistent across these scales, with a breakout observed on both further confirming the trend. Additionally, identifying reliable patterns like head and shoulders, inverse head and shoulders or double tops and bottoms can further validate trend breakouts. TradingView’s pattern recognition tools can automate this process and provide price targets, which can be helpful but are not always guaranteed. Step 3: Understand the Macro Following current macroeconomic conditions can enhance your understanding of the overall business cycle. The primary macro forces that influence asset markets are growth, inflation, and policy. These factors are subjective and not directly quantifiable, making them unsuitable for direct investment decisions. However, they are useful for assessing the market’s risk appetite, which should influence only your position size and not your systematic approach. The US Composite Leading Indicator (CLI) is one of the most informative macroeconomic indicators, providing insights into potential economic growth trends and helping anticipate inflections in the business cycle. Monitoring the US inflation and unemployment rates is also beneficial, as they significantly influence monetary policy. While minor fluctuations may not provide much insight, sustained trends that align with the Federal Reserve’s targets of 2% inflation and low unemployment are indicative of a healthy economy. Furthermore, tracking global liquidity can reveal the real-time effects of monetary and fiscal policies implemented by major central banks and governments. This serves as a valuable tool to assess the market’s risk appetite. In conclusion, this guide helps investors stay on the right side of the market by adopting a systematic approach that captures bull markets while avoiding major downturns. Recognizing that the future is unpredictable and that markets are driven by momentum, this method can both preserve and grow your wealth in a less stressful way. A disciplined, systematic approach, executed dispassionately, is essential for navigating market uncertainties. All indicators discussed are publicly available or can be accessed on my profile. Disclaimer: This article is for informational and educational purposes only and should not be construed as investment advice.
NASDAQ:NVDAEducation
by QuantitativeAlpha
5
How to Read the RSI Indicator: The Market's Lie DetectorAttention TradingViewers, market gurus, and Instagram influencers, this one indicator goes hard whenever it’s onto something. Let's talk about the RSI — the Relative Strength Index . This bad boy is like the lie detector test of the market, calling out overhyped moves and under-the-radar opportunities. What’s RSI All About? The RSI is a momentum-based oscillator that captures the speed and change of price movements. It operates on a scale of 0 to 100, and if you know how to read it, it’s like having X-ray vision into the market’s moods. The best part? It’s super easy to use — slap it on any chart, any time frame and let it do its thing. The Numbers Above 70 : Overbought alert! If the RSI shows a reading above 70, the trading instrument may have been partying a little too hard. Anywhere above 70 means that it’s flashing “overbought” – like a sugar rush that’s about to crash. Traders who follow the RSI usually interpret this as a signal to sell and move out of the asset before the line reverses course and dives back under the high-water mark. Sometimes, however, the price keeps climbing well above 70. Below 30 : Now we’re in “oversold” territory – it’s like spotting a hidden gem in a bargain bin. When RSI drops below 30, the market’s saying, “This thing’s been beaten down, but maybe – just maybe – it’s time for a comeback.” Keep in mind that sometimes the dip may keep dipping. How It’s Calculated RSI is all about relative strength — it compares the magnitude of recent gains to recent losses. Picture a tug-of-war between bulls and bears. The RSI score tells you who’s winning the battle right now, but also hints at who might be running out of strength. Trading with RSI Overbought? Maybe Sell (obligatory DYOR) . When RSI hits 70 and above, you might be looking at a market running out of fuel. You may start thinking about trimming your position, or at least keep an eye out for a reversal. After all, what goes up must come down (except maybe Bitcoin BTC/USD ?) Oversold? Maybe Buy (obligatory DYOR) . If the RSI drops to 30 and below, it could be a signal to start looking for a buying opportunity. The market is going through a meltdown and sometimes that’s your cue to go bargain hunting and snap up some discounted assets. Just make sure that your stock or crypto of choice isn’t falling for a specific reason — no indicator can save you from an actual rug pull. The Sweet Spot — Divergences: Ever notice when the RSI and price action don’t agree? That’s called a divergence, and it’s like catching the market in a lie. If the price is making new highs but the RSI isn’t, or vice versa, it’s a clue that something fishy’s going on and you may want to be on the lookout for a sur- price reversal. Bonus Tip: RSI in Different Timeframes Wanna get fancy and earn some bragging rights? Use RSI across different timeframes. A stock might be oversold on the daily but overbought on the weekly. By spotting the trend across different time frames, you can pick your desired time frame to trade in and follow closely. The higher the time frame, the longer the time horizon for the move to actually pan out. So, there you have it – the RSI. It’s not a crystal ball, but it’s pretty close. Use it wisely, and you might just outsmart the market — or at least stay ahead of the next big move. Keep those charts hot, continue learning about technical analysis and go smash those trading goals of yours. 🔥
Education
by TradingView
17
Problems of Technical AnalysisProblems of Technical Analysis Trading is a complex endeavour that involves many factors. The ability to analyse markets is something that allows traders to overcome trading difficulties. Technical analysis is widely used by traders to make informed decisions about the price movements of various assets, including stocks, currency pairs, and cryptocurrencies*. Technical analysis and trading are inextricably linked, but while this method provides valuable insights, it also comes with a set of challenges. This FXOpen article discusses the challenges associated with technical analysis and suggests how traders can effectively overcome these challenges. Three Main Assumptions of Technical Analysis Technical analysis is based on the Dow Theory, which includes three basic principles and assumptions, namely: 1. The market discounts everything. Technical analysis assumes that everything that happens and can affect the market is reflected in its price. This means that the price will tell you everything you need to know. 2. Prices move in trends. According to technical analysts, even when the market is not moving in a uniform manner, prices will show trends, and this is independent of the time frame in question. 3. History tends to repeat itself. Technical traders try to identify recurring patterns in price because they have made the assumption that what has happened before in its formation is likely to happen again. Although technical analysis follows predetermined rules and principles, the interpretation of the results is not always right. Technical analysis is limited to the study of market trends and does not delve deeply into an instrument or industry to understand how it works. Critics of technical analysis argue that these assumptions may not be accurate. Below, you will learn more about the complexities of the analysis. Subjectivity in Analysis One of the main technical analysis problems is its inherent subjectivity. Traders often rely on various tools and indicators, such as moving averages, MACD, and Fibonacci retracements, to interpret price charts. The issue arises when traders misread patterns or interpret these tools incorrectly, leading to inconsistent results and trading decisions. To mitigate this challenge, traders typically establish clear and objective criteria for their analyses. This includes identifying specific entry and exit points based on predetermined trading rules. In addition, referring to experienced traders or using algorithmic trading strategies can help reduce the impact of subjectivity. Data Quality and Reliability Forex, stock, and crypto* markets are known for their high volatility, which can result in irregular price movements and gaps in historical data. Traders often rely on past price movements to make predictions about future developments. When the historical data is incomplete or inaccurate, practical technical analysis becomes less effective. Traders should be cautious about data quality, ensuring that they have access to reliable sources. The use of multiple data sources and cross-referencing will help identify and eliminate inconsistencies. In addition, the limitations of historical data should be recognised and not relied upon exclusively. Over-Reliance on Indicators Many traders become over-dependent on technical indicators, believing they hold the key to successful trading. Of course, technical analysis learning is important, and indicators are valuable tools, but relying solely on them can lead to trading errors. The problem is exacerbated when traders use too many indicators simultaneously, leading to information overload and conflicting signals. The possible response to this challenge is to select a few key indicators that align with your trading strategy and combine their signals with other analysis tools, including price action and fundamental events. Over time, traders develop the ability to interpret price action without relying only on indicators. This is a skill that can provide a more holistic view of the market. Limited Predictive Power Technical analysis primarily focuses on historical price data and patterns to predict future price movements. However, it’s crucial to acknowledge that past performance is not always indicative of future results. The markets are influenced by a wide range of factors, including economic data releases, geopolitical events, and central bank policies, which can override technical signals. To address this issue, traders should combine exploring technical analysis graphs with evaluating fundamental factors. Considering both technical and fundamental factors helps traders make more informed trading decisions and reduce the risk of being blindsided by unexpected market events. Traders need to stay informed and adaptive, even if they base their strategies on chart analysis. Emotional Trading Emotions play a significant role in trading, and technical analysis can sometimes exacerbate emotional decision-making. For example, if emotions overwhelm you during technical forex analysis, it may lead to mismanagement of trades and losses. Those who become too emotionally attached to their technical analysis may hesitate to cut their losses or take profits. System hopping is another common problem that stems from excessive impulsiveness. Traders may switch from one system or strategy to another in search of quick profits. However, this can result in confusion and inconsistency. Sticking to a trading plan and avoiding impulsive decisions can help mitigate emotional challenges. To overcome stress and prevent emotional decision-making, traders adopt disciplined risk management strategies, such as setting stop-loss orders and take-profit levels in advance. Traders calculate their risk-reward ratio to determine how much loss they can bear for the reward they are expecting. Time-Consuming Process Technical analysis can be time-consuming, especially for traders who engage in short-term trading strategies. Analysing charts, identifying patterns, and monitoring technical indicators in technical analysis is a demanding task. It could be difficult for traders with limited time to spare. The first method is to use clear and reliable trading tools with user-friendly UI. Consider the TickTrader trading platform, where you can find both simple and advanced tools and trade various assets. Another solution is to consider longer timeframes, as they require less frequent monitoring. Additionally, using automated trading systems helps traders save time while still benefiting from technical analysis insights. Final Thoughts Technical analysis is an invaluable tool in the trader’s arsenal, providing a structured approach to analysing price movements. However, it’s essential to be aware of the challenges associated with this method and take proactive steps to address them. Minimising subjectivity, using reliable data, avoiding over-reliance on indicators, and managing emotions help traders perform better in the market. Now that you know some valuable insights about trading, you can open an FXOpen account and start your journey with us. *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Predicting Bitcoin's Cycle Using the Elliott Wave Theory, Part 2Hello traders. In this article, we dive deeper into another detailed way of seeing Bitcoin's potential end-of-cycle pattern. This is the 2nd part to the previous post that discusses Bitcoin's cycle using the Elliott Wave Theory - a comprehensive and subjective theory. Here, we will be exploring an alternative scenario that builds on our previous concept of Bitcoin fractals since its inception in 2009. By addressing some of the subjectivity in the wave theory and leveraging market psychology and algorithmic fractals, this post is aimed to provide another organized and insightful look at the structure of Bitcoin's price movements.
If you are interested in seeing the first scenario, here is a link for your convenience: For this alternative scenario, as mentioned above, it addresses some of the subjectivity that arises from the Elliott Wave Theory, specifically the observation of multiple 1-2 scenarios presented in our previous idea. Although the idea was supported by evidence from market psychology and algorithmic fractals, the problem arises by having the possibility of infinite 1-2 nested structures that works upon extending each internal wave - which is a pretty rare observation in any markets; however, Bitcoin has been able to withstand year by year and work on a pretty timely schedule. Based on the expectations, we used that observation to create the scenario of nested 1-2's. Nevertheless, due to its possible subjective count, this idea focuses more on the structural integrity of the basic 5-wave pattern and being able to fit the whole price action from inception as a 5-wave pattern.
 Simply put, this thesis aims to create a more organized structure. As many are still eager to determine how far Bitcoin might correct after this bull run ends, I hope this idea can also give you confidence to help build your own thesis.
 There is one thing that is for sure, however: the evidence portrayed from both of these scenarios strongly suggests that we will see higher levels before lower levels, though no theory can be 100% accurate, we could technically see a reversal even now. But my duty is to make sure to narrow down the scenarios as best as I can.
 For this specific idea, we have structured this whole move up as 5 waves since inception, sticking as closely as possible to the basic Elliott Wave model of the 5-wave impulse. To achieve this, we made some simple adjustments from the first thesis in the previous post.

The challenge for many arises when trying to fit a wave 3 that must be the longest or second longest wave compared to waves 1 and 5. In this chart, since primary wave 1 in yellow is the longest, wave 5 must be technically shorter than wave 3, which is a strict rule and must be obeyed.
 To accomplish this, we can use the 2017-2020 price action as a range initself for wave 4. Previously, we considered the pandemic crash as a technical bottom. If we use that as a sideways range, the only viable sideways patterns are triangles and flats (as we have exhausted the zigzag family correction patterns for wave 4 already). For more details on these patterns, please refer to the previous guide on triangle and flat patterns in my Elliott Wave Theory guide on my main page. By using the 2017-2020 range as a triangle, our subwave E has resulted in an extremely short subwave, known as a failure or truncation. After breaking out of the triangle, the next step is to figure out on how to form wave 5, which is the final part of the 5-wave motive impulse.
 Currently, the only way we can see wave 5 concluding is through a possible diagonal given the current data. Why? We would typically expect a basic 5-wave move for wave 5, but since wave 5 has to be short and wave 1 was extended, we do not expect the last primary wave 5 in yellow to be extended. Thus, the only remaining option is a possible diagonal pattern to complete wave 5, since we have also assumed it will be short due to wave 1 already being the longest wave and wave 3 being the 2nd longest wave.

This Ending Diagonal, which consists of 5 waves (unlike a Leading Diagonal, which appears in waves 1 or A), they are only observed in wave 5s or wave Cs.
 To construct our Ending Diagonal, the five subwaves must be zigzags (simple ABCs) or complex zigzags (WXYs). We are currently observing a mix of these, which is normal in diagonals: 
 * Subwave (1): ABC. Observed as a long wave A and short wave C. This can be debated, but longer wave As compared to wave Cs are not uncommon. * Subwave (2): WXY. A WXYXZ could fit as well like we observed in our previous post, but that deviates significantly from the traditional structure. A WXY is the next best alternative, and even that can be subjective as we typically observe simple ZigZags (ABCs) within diagonals. * Subwave (3): Currently being created. With the available data, it could be an ABC, though it may become more complex going forward. * Subwave (4) / (5) : To be determined. Must belong to the zigzag family.

 As we are still working on subwave (3) within the ending diagonal, the interest level for a pullback remains the same as in our previous idea, THAT IS THE KEY. This significant pullback could validate this idea, so we will monitor it up to that point.
 This larger picture presents a wide range between subwaves 4 and 5, similar to waves 1 and 2.
 Once subwaves 4 and 5 are created, it will technically terminate the larger degree wave 5 of the entire 5-wave impulse cycle. After termination, a significant downside correction is possible, potentially reaching levels as low as $3,000. Alternatively, we also have a completely different count where this cycle wave 1-2 may be already in play, and it can be achieved by using a larger flat idea that may also help with separation and further deepend subjectivity. Here is that approach: In conclusion, while the evidence strongly suggests that Bitcoin will reach higher levels before any significant correction, it is crucial to remain adaptable as market conditions evolve. The analysis presented here offers merely a potential roadmap. No theory can predict market movements with absolute certainty. By staying informed and considering multiple scenarios, investors can better navigate the complexities of the cryptocurrency market. I invite EVERYONE to share your thoughts and engage with this post in the comments below.
INDEX:BTCUSDEducation
by XForceGlobal
110
What is Support and Resistance in Trading. Key Levels Basics In the today's article, we will discuss the absolute basics of technical analysis: support and resistance levels. I will explain to you why support and resistance are important , how to identify them properly, and we will discuss what is the difference between support and resistance level and support or resistance zone. Let's start with a definition of a support . A support is a historically significant price level that lies below the current prices of an asset. While a resistance is a historically significant price level that is above the current prices. From a key resistance, a bearish movement will be anticipated in futures, while from a key support, a bullish reaction will be expected. Take a look at EURAUD pair, we can see a perfect example of a key resistance level. 2 times in a row, the market dropped from that in the past, confirming its significance. By a historical significance , I mean that the price reacted strongly to such price level in the past and a strong bullish, bearish movement initiated from that. Above is the example of a key horizontal support on EURCHF. The underlined key level was respected by the market multiple times in the past. From time to time, the market breaks key levels. After a breakout , a support turns into resistance and a resistance turns into support. Above is the example of a breakout of a key support on GBPNZD, after its violation it turned into resistance from where a bearish movement followed. Always remember, that in order to confirm a breakout of a key support, we strictly need a candle close below that. By the way, the structure here is also the zone, but we will discuss it later on. Above is the example of a breakout of a key resistance, that turned into support after a violation. Very often, newbie traders ask me, how many times the price should react to a key level to make it valid. I do believe that 1 time is more than enough, however, make sure that the reaction to that is strong . Above are key support and resistance on GBPCAD. Even though both structures were respected just one time in the past, the reaction to them was strong enough to confirm that the underlined levels are the key levels. However, historical significance of a key support or resistance is not enough to make it valid. What matters is the most recent reaction of the price to that. Key supports and resistance lose their significance with time, and your job as a technical analyst, is to stay flexible and adapt to changing market conditions, regularly updating your analysis. Above is a key resistance level on AUDJPY from where the market dropped heavily 2 times in a row. However, with time, the underlined resistance lost its significance. Such a structure is not a key level anymore. Remember a simple rule: if a key structure is not respected by the sellers, and by the buyers after its breakout. Or vice versa: if a key structure is not respected by the buyers, and then by the sellers after its breakout. Such a structure is not a key level , and you should not rely on that in the future. In our example, the resistance was broken - it was neglected by the sellers. After the breakout, it should have turned into support, but the buyers also neglected that and the structure lost its strength. Now, a couple of words about time frames, you can identify key support and resistances on any time frame, but the rule is that higher is the time frame, more significant are the supports and resistances there. In my analysis, I primarily rely on support and resistance on a daily time frame. Always remember that the financial markets are not perfect and the prices will quite rarely respect the exact support or resistance levels. Quite often, the markets may fluctuate around key levels so it is highly recommendable to rely not on single key levels but on zones. I recommend taking into consideration not only the exact level from where a strong reaction followed, but also a candle close level of such a candle. The support zone above is based on a wick and a candle close of a candle. Also, quite often there will be the situations when multiple key levels will lie close to each other. In such a case, it is better to unite all this structures in one single zone. Above we see multiple key resistances. We will unite all these resistances into one single zone. The upper boundary of a resistance zone will be the highest wick and its lower boundary will be the highest candle close. Above we have 2 key supports lying close to each other. We will unite these supports into one single zone. The lower boundary of a support zone will be the lowest wick and the upper boundary will be the lowest candle close. Here is how a complete structure analysis should look. Following the rules that we discussed, you should identify at least 2 closest key resistances and 2 closest key supports. These structures will be applied as the entries for various trading strategies. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
23
Charting the Markets: Top 10 Technical Analysis Terms to KnowWelcome, market watchers, traders, and influencers to yet another teaching session with your favorite finance and markets platform! Today, we learn how to marketspeak — are you ready to up your trading game and talk like a Wall Street pro? We’ve got you covered. This guide will take you through the top technical analysis terms every trader should know. So, kick back, grab a drink, and let’s roll into the world of candlesticks, moving averages, and all things chart-tastic! 1. Candlestick Patterns First up, we have candlesticks , the bread and butter of any chart enthusiast. These little bars show the opening, closing, high, and low prices of a stock over a set period. Here are some key patterns to recognize next time you pop open a chart: Doji : Signals market indecision; looks like a plus sign. Hammer : Indicates potential reversal; resembles, well, a hammer. Engulfing : A larger candle engulfs the previous one, suggesting a momentum shift. Want these automated? There's a TradingView indicator for that. 2. Moving Averages (MA) Next, we glide into moving averages . These are practically lines that smooth out price data to help identify trends over time. Here are the big players: Simple Moving Average (SMA) : A straightforward average of prices over a specific period of days. Exponential Moving Average (EMA) : An average of prices but with more weight to recent prices, making it more responsive to new information. 3. Relative Strength Index (RSI) The RSI is your go-to for spotting overbought and oversold conditions. Ranging from 0 to 100, a reading above 70 means a stock might be overbought (time to sell?), while below 30 suggests it could be oversold (time to buy?). Super common mainstay indicator among traders from all levels. 4. Bollinger Bands Bollinger Bands consist of a moving average with two standard deviation lines above and below it. When the bands squeeze, it signals low volatility, and when they expand, high volatility is in play. Think of Bollinger Bands as the mood rings of the trading world! 5. MACD (Moving Average Convergence Divergence) The MACD is all about momentum. It’s made up of two lines: the MACD line (difference between two EMAs) and the signal line (an EMA of the MACD line). When these lines cross, it can be a signal to buy or sell. Think of it as the heartbeat of the market. 6. Fibonacci Retracement Named after a 13th-century mathematician, Fibonacci retracement levels are used to predict potential support and resistance levels. Traders use these golden ratios (23.6%, 38.2%, 50%, 61.8%, and 100%) to find points where an asset like a stock or a currency might reverse its direction. 7. Support and Resistance Support and resistance are the battle lines drawn on your chart. Support is where the price tends to stop falling — finds enough buyers to support it — and resistance is where it tends to stop rising — finds enough sellers to resist it. Think of these two levels as the floor and ceiling of your trading room. 8. Volume Volume is the fuel in your trading engine. It shows how much of a stock is being traded and can confirm trends. High volume means high interest, while low volume suggests the market is taking a nap from its responsibilities. 9. Trend Lines Trend lines are your visual guide to understanding the market’s direction. Technical traders, generally, are big on trend lines. You can draw them by connecting at least a couple of lows in an uptrend or at least a couple of highs in a downtrend. They help you see where the market has been and where it might be headed. 10. Head and Shoulders No, it’s not shampoo. The head and shoulders pattern is a classic reversal pattern. It consists of three peaks: a higher middle peak (head) between two lower peaks (shoulders). When you see this take shape in your chart, it might be time to rethink your position. What’s Your Favorite? So there you have it, a whirlwind tour of the top technical analysis terms that’ll help your trading yield better results and, as a bonus, make you sound like a trading guru. What’s your favorite among these 10 technical analysis tools? Share your thoughts in the comments below!
Education
by TradingView
18
Technical Analysis vs. Fundamental Analysis: Why Not Both?Hey there, fellow traders and market mavens! Ever found yourself staring confused at the screen and not making sense of things that happen in trading? So you decided to wander off deep into technical analysis shutting out its other half — fundamental analysis? Or vice versa — you digested every economic report that big media outlets churned out and yet failed to factor in some support and resistance levels? Fear not, for we've got the lowdown on why you don't have to pick sides and go with either the Fibonacci sequence or the latest jobs data . In fact, we're here to tell you why embracing both might just be your secret to trading success. So, grab your charts and financial reports and let's dive into the world where candlesticks meet earnings reports! Technical Analysis: The Lost Art of Tape Reading Technical analysis is like the cool, intuitive friend who always seems to know what's going to happen next. It's all about reading the market's mood through price charts, patterns and indicators. Here's why tech analysis should be in your skill set: Trend Spotting : Ever wished you could predict the next big trend? With moving averages, trend lines and momentum indicators like the MACD, you can ride the waves like a pro surfer and let the market carry your trades into a sea of profits. Timing is Everything : Candlestick patterns and support/resistance levels are your besties when it comes to perfect timing. The more you study them, the more you elevate your chances of entering and exiting trades with ninja-like precision. Market Sentiment : Tools like the Relative Strength Index (RSI) and Bollinger Bands give you the scoop on whether the market's feeling overbought, oversold or just right. Learn these if you want to increase the probability of correctly gauging the market’s mood. But hold up, before you get lost in the charts, let's not forget about the fundamentals. Fundamental Analysis: Making Sense of Things If technical analysis is your go-to for instant market vibes, fundamental analysis is the place to figure out why things happened in the first place. Here’s why fundamentals are a big deal and can help you to a) learn what moves markets and b) become fluent in marketspeak and own every trading conversation: Long-Term Vision : While technical analysis can sometimes feel like guesswork, fundamental analysis is spitting facts. Earnings reports, P/E ratios and economic indicators help you see the bigger picture and educate you into a better, more knowledgeable trader. Value Hunting : Ever heard of value investing legends like Warren Buffett? They thrive on finding undervalued gems through rigorous fundamental analysis. And, some say, this approach to investing is not reserved for companies only. It works for crypto, too. Economic Health Check : Understanding GDP growth, interest rates and inflation can feel like having a crystal ball for market trends. And, one big plus is that you’ll become a lot more interesting when you explain things like monetary policy or forward-looking guidance to your uncle at the Thanksgiving table. The Power Couple: Combining Technical and Fundamental Analysis Now, here’s the kicker: Why choose one when you can have both? Imagine the synergy when you combine the swift foresightedness of technical analysis with the solid foundation of fundamental analysis. Here’s how to make this dynamic duo work for you: Double-Check Your Entries and Exits : Use technical analysis for pinpointing your entry and exit points but back it up with fundamental analysis to build a convincing narrative of the asset’s long-term potential. Confirm the Trend : Spot a promising trend with technical indicators? Validate it with strong fundamentals to make sure it’s not just a flash in the pan. Risk Management : Technical analysis can help set your stop-loss levels, while fundamental analysis keeps you informed about any potential game-changers in the market. Diversification : Fundamental analysis might show you the hottest sectors right now, while technical analysis can help you call tops and bottoms if an indicator you trust is showing oversold or overbought levels. Wrapping Up So, there you have it, folks! Technical analysis and fundamental analysis don’t have to be opposite camps. Think of them as your dynamic duo, Batman and Robin, peanut butter and jelly — better together. By blending the best of both worlds, you’ll increase your chances of success in trading and do yourself a favor — you’ll get to know a lot and become more interesting! Ready to take your trading game to the next level? Start combining technical and fundamental analysis and watch as your trading strategies transform into a market-crushing masterpiece. Happy trading and may your profits be ever in your favor!
SP:SPXEducation
by TradingView
14
Do Not Overwhelm Your Price Chart! In this article, we will discuss a very important term in trading psychology - paralysis by analysis in trading. Paralysis by analysis occurs when the trader is overwhelmed by a complexity of the data that he is working with. Most of the time, it happens when one is relying on wide spectra of non correlated metrics. That can be various trading indicators, different news outlets and analytical articles and multiple technical tools. Relying on such a mixed basket, one will inevitably be stuck with the contradictory data. For example, the technical indicators may show very bearish clues while the fundamental data is very bullish. Or it can be even worse, when the traders have dozens of indicators on his chart and half of them dictates to open a long position, while another half dictates to sell. Above, you can see an example of a EURUSD price chart that is overwhelmed by various technical indicators: Ichimoku, MA, Volume, ATR support and resistance levels fundamental data As a result, the one becomes paralyzed , not being able to make a decision. Moreover, each attempt to comprehend the data leads to deeper and deeper overthinking, driving into a vicious circle. The paralysis breeds the inaction that necessarily means the missed trading opportunities and profits. How to deal with that? The best option is to limit the number of data sources used for a decision-making. The rule here is simple - the fewer indicators you use, the easier it is to make a decision. EURUSD chart that we discussed earlier can look much better. Removing a bunch of tools will make the analysis easier and more accurate. There is a common fallacy among traders, that complexity breeds the profit. With so many years of trading, I realized, however, that the opposite is true... Keep the things simple, and you will be impressed how accurate your predictions will become. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
18
How to Read the MACD Indicator and Use It in Your TradingTechnical analysis is a vast field with thousands of indicators, which may be confusing to those among us who are just starting out. In this Idea, we look at one of the most popular indicators and also one of the easiest ones to fire up and start using from Day 1. MACD (Moving Average Convergence Divergence) MACD is arguably the most widely used indicator that can get slapped on virtually every chart out there. The indicator’s full name is Moving Average Convergence Divergence, but you don’t need to remember that. If you need to take away one thing, it’s this: MACD is easy to read. Here’s how to do it. Technical Side of Things Add the MACD in your chart of choice — any chart, any time frame. You’ll see three default numbers used to set it up — 12, 26, 9. The 12 is the moving average of the previous 12 bars (also called faster moving average). The 26 is the moving average of the previous 26 bars (also called slower moving average). The 9 is the moving average of the difference between the two averages in play. Next, you see that there are two lines that move up and down and cross each other occasionally. The two lines are: The MACD line: the difference between the two moving averages and the “faster line”. The Signal line: the moving average of the MACD line and the “slower line”. Because the two lines measure price changes at different speeds, the faster one (MACD) will always run ahead and react before the slower one (Signal) catches up. How to Trade with MACD If all that sounds a bit complex, here’s the gist of it: Faster line leads, slower line follows. Faster line crosses slower line to the downside — a downward trend may be forming. Faster line crosses slower line to the upside — an upward trend may be forming. Technically, whenever a new trend is shaping up, the slower line should confirm it by following the faster line. And that happens when the two cross over. The way to potentially spot new trading opportunities is to look for the crossover. This, in a nutshell, is how to read the MACD indicator and use it to help you become a more profitable trader. There's a whole plethora of MACD examples in action — dive right in ! Let us know your thoughts and experience with the MACD in the comments below!
Education
by TradingView
7
Psychological Levels and Round Numbers in Technical Analysis When traders analyze the key levels, quite often then neglect the psychological levels in trading. In this article, we will discuss what are the psychological levels and how to identify them . What is Psychological Level? Let's start with the definition. Psychological level is a price level on a chart that has a strong significance for the market participants due to the round numbers. By the round numbers, I imply the whole numbers that are multiples of 5, 10, 100, etc. These levels act as strong supports and resistances and the points of interest of the market participants. Take a look at 2 important psychological levels on EURGBP: 0.95 and 0.82. As the market approached these levels, we saw a strong reaction of the price to them. Why Psychological Levels Work? And here is why the psychological levels work: Research in behavioral finance has shown that individuals exhibit a tendency to anchor their judgments and decisions to round numbers. Such a decision-making can be attributed to the cognitive biases. Quite often, these levels act as reference points for the market participants for setting entry, exit points and placing stop-loss orders. Bad Psychological Levels? However, one should remember that not all price levels based on round numbers are significant. When one is looking for an important psychological level, he should take into consideration the historical price action. Here are the round number based levels that I identified on AUDUSD on a weekly time frame. After all such levels are underlined, check the historical price action and make sure that the market reacted to that at least one time in the recent past. With the circles, I highlighted the recent reaction to the underlined levels. Such ones we will keep on the chart, while others should be removed. Here are the psychological levels and proved their significance with a recent historical price action. From these levels, we will look for trading opportunities. Market Reaction to Psychological Levels Please, note that psychological levels may trigger various reactions of the market participants. For instance, a price approaching a round number may trigger feelings of greed, leading to increased selling pressure as traders seek to lock in profits. Alternatively, a breakout above/below a psychological level can trigger buying/selling activity as traders anticipate further price momentum. For that reason, it is very important to monitor the price action around such levels and look for confirmations . Learn to identify psychological levels. They are very powerful and for you, they can become a source of tremendous profits. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
1
RSI Indicator LIES! Untold Truth About RSI! The Relative Strength Index (RSI) is a classic technical indicator that is applied to identify the overbought and oversold states of the market. While the RSI looks simple to use, there is one important element in it that many traders forget about: it's a lagging indicator. This means it reacts to past price movements rather than predicting future ones. This inherent lag can sometimes mislead traders, particularly when the markets are volatile or trade in a strong bullish/bearish trend. In this article, we will discuss the situations when RSI indicator will lie to you. We will go through the instances when the indicator should not be relied and not used on, and I will explain to you the best strategy to apply RSI. Relative Strength Index analyzes the price movements over a specific time period and displays a score between 0 and 100. Generally, an RSI above 70 suggests an overbought condition, while an RSI below 30 suggests an oversold condition. By itself, the overbought and overbought conditions give poor signals, simply because the market may remain in these conditions for a substantial period of time. Take a look at a price action on GBPCHF. After the indicator showed the oversold condition, the pair dropped 150 pips lower before the reversal initiated. So as an extra confirmation , traders prefer to look for RSI divergence - the situation when the price action and indicator move in the opposite direction. Above is the example of RSI divergence: Crude Oil formed a sequence of higher highs, while the indicator formed a higher high with a consequent lower high. That confirmed the overbought state of the market, and a bearish reversal followed. However, only few knows that even a divergence will provide accurate signals only in some particular instances. When you identified RSI divergence, make sure that it happened after a test of an important key level. Historical structures increase the probability that the RSI divergence will accurately indicate the reversal. Above is the example how RSI divergence gave a false signal on USDCAD. However, the divergence that followed after a test of a key level, gave a strong bearish signal. There are much better situations when RSI can be applied, but we will discuss later on, for now, the main conclusion is that RSI Divergence beyond key levels most of the time will provide low accuracy signals. But there is one particular case, when RSI divergence will give the worst, the most terrible signal. In very rare situations, the market may trade in a strong bullish trend, in the uncharted territory, where there are no historical price levels. In such cases, RSI bullish divergence will constantly lie , making retail traders short constantly and lose their money. Here is what happens with Gold on a daily. The market is trading in the uncharted territory, updated the All-Time Highs daily. Even though there is a clear overbought state and a divergence, the market keeps growing. Only few knows, however, that even though RSI is considered to be a reversal, counter trend indicator, it can be applied for trend following trading. On a daily time frame, after the price sets a new high, wait for a pullback to a key horizontal support. Your bullish signal, will be a bearish divergence on an hourly time frame. Here is how the price retested a support based on a previous ATH on Gold. After it approached a broken structure, we see a confirmed bearish divergence. That gives a perfect trend-following signal to buy the market. A strong bullish rally followed then. RSI indicator is a very powerful tool, that many traders apply incorrectly. When the market is trading in a strong trend, this indicator can be perfectly applied for following the trend, not going against that. I hope that the cases that I described will help you not lose money, trading with Relative Strength Index. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
34
What Is Behavioural Finance?What Is Behavioural Finance? Behavioural finance is a field that combines the principles of psychology and economics to understand how human behaviour affects financial decisions and markets. It recognises that people are not always rational, and their emotions, biases, and cognitive errors can influence their financial choices. Behavioural finance is a growing field of study that continues to gain recognition and influence in the sector. Researchers study how people process information, how they form expectations, and how they react to market events. In this FXOpen article, we will consider the cornerstones of behavioural finance theory. Behavioural Finance Definition Let’s start with the behavioural finance theory. Behavioural finance is the study of how psychological factors, such as emotions and biases, impact financial decision-making and market outcomes. It seeks to explain why people often deviate from rationality when making financial decisions and how these deviations lead to market fluctuations. The emergence of behavioural finance can be traced back to the groundbreaking work of Daniel Kahneman and Amos Tversky in the 1970s. Today, big-name universities around the world continue to study the impact of different factors on decision-making in business, investing, and personal finance. Understanding Economic Behaviour and Psychology Behavioural finance recognises that economic behaviour is determined by more than rationality and self-interest. The study takes into account the following psychological factors: Emotional influence. Emotions like fear, greed, and overconfidence lead a person to make irrational choices, e.g. adding funds to a losing trade or changing take-profit targets to cover more gains. Behavioural financial biases. Many biases influence decision-making, for example, confirmation bias (favouring information that confirms pre-existing beliefs) and accessibility bias (overestimating the importance of readily available information). Cognitive errors. People are prone to cognitive errors, such as overestimating their abilities or relying on heuristics (mental shortcuts) instead of careful analysis. What Is Economic and Financial Heuristics? Heuristics is the process by which people use mental shortcuts and simple strategies to quickly form judgements and make decisions. In the context of behavioural finance, economic and financial heuristics refer to cognitive shortcuts that simplify financial decision-making. The most common of them include: Representativeness heuristic: judgments are based on similarity to a prototype or stereotype. For example, an investor may assume that a company with a well-known brand is a safer investment, even if there is no objective evidence to support this belief. Availability heuristic: judgments rely on the ease with which relevant examples or information come to mind. For example, an investor may invest in a particular industry if they recently read positive news about it, even if the overall market conditions are unfavourable. Anchoring heuristic: this involves individuals forming estimates by commencing from an initial value, often referred to as an "anchor." For example, an investor may anchor their price estimate for a stock based on its current market price, even if the fundamental factors suggest a different valuation. If you are interested in the topic of trading psychology and want to learn more, explore our blog. We’ve posted several related articles you may like. We are happy to provide our clients with valuable insights that could help them gain new skills and knowledge. Behavioural Finance Biases As we mentioned, behavioural finance recognises that investors can be irrational and that their decisions can be influenced by biases. Here are some of the potential biases: Self-attribution bias — traders attribute positive investment results to their own skills and blame negative results on external factors or bad luck. Confirmation bias — people pay close attention to information that supports a financial or investment belief and disregard whatever contradicts it. Framing bias — an investor reacts to a certain financial opportunity based on how it is presented. The way information is framed influences their choices. Loss aversion — the fear of losing money may become a more powerful inhibitor for an investor; if it is, they won’t take risks and may miss out on potential profits. Cognitive Errors Apart from behavioural biases in finance, there are inefficient decisions that could be partially the result of cognitive errors. Cognitive distortions are rigid errors in thinking that grossly misinterpret events in harmful or negative ways. These patterns are full of assumptions and incorrect logic, while real-world evidence does not back them up. The most common errors include: Filtering Polarisation Overgeneralisation Discounting the positive Hasty conclusions Catastrophising Everyone falls into cognitive distortions from time to time, but if you engage too frequently in negative thoughts, your mental health can take a hit. Emotional Reasoning Emotional reasoning refers to a cognitive mechanism through which a person arrives at the belief that their emotional reaction validates the truth of a statement or situation, even in the presence of contradictory evidence. Fear and greed are strong emotions that often drive people to make blind decisions. Fear can lead to panic selling during market downturns, while greed can lead to excessive risk-taking and speculative behaviour. How Does Investor Behaviour Differ? The frequent prejudices seen in investor behaviour are: Herding — when investors follow the crowd and base their actions on what others do (buy, hold, or sell). Overconfidence — when investors overestimate their abilities and believe they can consistently outperform the market. How Does Trader Behaviour Differ? Traders may be influenced by the following: Momentum trading — when they follow trends and buy or sell based on recent price movements rather than fundamental analysis. Overtrading — when traders engage in excessive buying and selling, driven by emotions like fear or greed. Confirmation bias — when traders overvalue their pre-existing beliefs and ignore contradictory evidence. Market Psychology Market psychology is based on the emotional factors that influence the decisions of participants in financial markets. People's behaviour is often driven by their perceptions, beliefs, and expectations about the market and the economy. They are influenced by news events, economic data, and geopolitical developments. Let’s consider three common examples of market inefficiencies explained by psychology: Market bubbles , when asset prices become detached from their underlying fundamentals, can be driven by herd behaviour and excessive optimism. Market crashes , when assets lose value for no particular reason, can be triggered by panic selling and fear. Market anomalies , such as the value premium or the momentum effect, suggest that investors deviate from rationality and create opportunities for profit. These anomalies cannot be explained by traditional studies but can be justified by behavioural finance theories. Final Thoughts In recent years, this field has gained momentum; for example, scientists exploring the impact of the COVID-19 pandemic and the development of online services that influence consumer preferences. As this field evolves, it’s likely to have a significant impact on the way we think about investing and managing risk. Technical analysis indicators may help traders overcome behavioural finance bias and base their decisions on price data and effective indicators and patterns that have been used by traders for years. To try them, you can use the FXOpen TickTrader platform. If you are ready to start trading, you can open an FXOpen account. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Mastering Risk: Stop Loss in TradingTypes of Stop Loss Money Stop Definition: A trader sets a fixed amount they are willing to lose on a trade, for example, £20. Issue: This approach often leads to larger losses because it doesn’t align with market movements. Advice: Avoid using the money stop. Time Stop Definition: Used mainly by scalpers, this involves closing a trade if it doesn't move in the expected direction within a set time frame (e.g., 4-8 bars). Key Point: It requires discipline to adhere to the set time limit. Advice: Suitable for scalpers. Technical Stop Loss Definition: Based on price movements and market structure, this is the most effective stop loss for technical traders. Types: Initial Stop Loss: Set at the entry of a new position, usually at a momentum high or low. The trade remains valid as long as the price doesn't reach this point. Technical Trailing Stop: Used to protect gains on a winning trade. As the price moves in your favor, adjust the stop to a new structure point that, if reached, invalidates the trade.
Education
by Charts247TradingAcademy
Why longer term charts are importantI took a look at the weekly gold/silver ratio and noticed a few significant patterns. For example, there was a notable acceleration downward following the break of a 3-year uptrend a couple of weeks ago. Additionally, there is support at the 74.65/63 level, which has been in place since January 2022. This observation reminded me of the importance of examining long-term charts, regardless of your trading time frame. Longer-term charts provide essential context and clarity that short-term charts often lack. Why everyone should be looking at longer term charts: 1. Identifying Trends Long-term charts help in identifying significant trends that might not be visible in short-term data. 2. Smoothing Out Volatility Short-term data is often noisy, with frequent fluctuations that can obscure the underlying pattern. Long-term charts smooth out this volatility, providing a clearer picture of the fundamental movement and reducing the influence of random, short-term events. 3. Contextualizing Current Movements Long-term charts place current price or economic movements in a broader context. This helps investors and analysts understand whether a recent change is part of a larger trend or not. 4. Historical Comparisons These charts allow for comparisons with past periods, making it possible to identify cycles, recurring patterns, and historical precedents. This historical perspective can be invaluable for forecasting future movements and making informed predictions. 5. Assessing Risk and Reward By examining long-term performance, investors can better assess the potential risks and rewards of an investment. Understanding how an asset has performed over various market cycles helps in evaluating its stability and growth potential. 6. Avoiding Emotional Bias Short-term market movements can evoke strong emotional responses, leading to impulsive decisions. Long-term charts provide a more detached view, helping investors stay focused on long-term objectives and avoid reacting to short-term market noise. Conclusion In summary, long-term charts offer a comprehensive view that is critical for understanding trends, reducing noise, contextualizing current events, making historical comparisons, assessing risk, avoiding emotional decisions, developing strategies, and analysing economic cycles. They are an indispensable tool for anyone involved in financial markets or economic analysis, providing the clarity and perspective necessary for informed decision-making. Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
TVC:GOLDSILVEREducation
by The_STA
7
Want to spot a turning point in trend before it happens?Want to spot a turning point in trend before it happens? Use Elliott wave parallel channel This chart shows the GBP/JPY currency pair using monthly candlesticks. The advance from Sep 2011 to June 2015 can be labeled as an impulse wave (A). From that high, the pair declined in three waves labeled as wave (B) of a Zigzag A-B-C correction with an expanding diagonal characteristic in the C wave position. As a rule, in a Zigzag rally, wave B notably terminates above the origin of wave A. When wave (C) advance of a zigzag rally is in operation, we can forecast where wave (C) might end. We can use Elliott wave channel projection by connecting the origin of wave (A) with the end of wave (B) and then drawing a parallel line from the end of wave (A). As a guideline, the resulting channel gives us a potential target for the wave (C) endpoint. Moreover, we can also use ratio analysis to improve the odds. As a guideline, in Zigzag formations, wave (C) commonly ends after traveling the same length as wave (A). Observe this level corresponds with the Elliott wave channel projection. This cluster of evidence hints at wave (C) advance from Mar 2020 is in late stages and that prices are approaching a major top.
Education
by Aquanet_Market_Forecast
17
The 3-Step Method For High-Quality AnalysisIn this video I give you the 3-step method I use to do my analysis. By incorporating these steps, it is also how I do my top-down analysis. You can think of it as a checklist as well. First, I have my Bias, which determines where I believe price is drawn to. For example in the case of SMC/ICT Concepts, we observe where the liquidity is in the market and use that to frame where price is likely going to go to sooner or later. Secondly, I have my Narrative, which is on a lower timeframe, and paints the picture of HOW price is going to form in order to initiate the move to that price target. This usually includes more engineered liquidity on lower timeframes, and manipulation to happen. Thirdly, I have my Confirmation, which is where I want to enter a trade. This is the lowest of the three timeframes, and is the final point in which I will frame a trade setup. Usually I will look for the exact same things I look for in my Bias and Narrative, but on this timeframe. I also tend to include the factor of time, such as Killzones, Seasonality, and News Drivers. Note that the timeframes can be anything you want them to be, and you are not restricted from moving from timeframe to timeframe. But, the important thing is to be consistent with WHERE you believe price is going, HOW you think it may get there (this can change as price forms), and again WHERE you are going to enter a trade. - R2F
Education
by Road_2_Funded
Best SUPPORT and RESISTANCE Indicator to Identify Key Levels In this article, I will show you a simple technical indicator that will help you to identify support and resistance levels easily trading any financial market. And what I like about this indicator is that it is absolutely free and it is available on all popular trading platforms: tradingview, meta trader 4, meta trader 5, etc. This indicator is called Zig Zag. After adding the indicator, the price chart will look like that. First, I recommend changing its settings. Price deviation - 1.5 Pivot legs - 5 Here are the inputs that I recommend for structure analysis on a daily time frame. And in style remove labels because they really distract. What this technical indicator does, it underlines the significant impulse legs. The completion and initial points of the impulses will be the important structures. Your key structures will be the areas based on the initial/completion points of impulses based on wicks and candle closes. A key horizontal support will be based on the initial point of the impulse and the lowest candle close. Key supports will be all the structures that are below current price levels. A key horizontal resistance will be based on the initial point of the impulse and the highest candle close. Key resistances will be all the structures that are above current price levels. Also, the completion/initial points of the impulses will occasionally compose the vertical structures - the trend lines. Underline all the supports/resistances based on Zig Zag indicator. All these structures are significant and can be applied for pullback/breakout trading. Also, remember that you can modify the inputs of the indicator. Increase Price deviation and Pivot legs number will show the stronger structures, while decreasing these numbers more structures will appear on the chart. On the left chart: Price deviation - 1.5 Pivot legs - 5 On the right chart: Price deviation - 5 Pivot legs - 10 The right chart shows just 2 structures, but very important ones. This indicator is very powerful and it can help you a lot in learning structure analysis. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
8
Don't Trade These Trend Lines | Forex Trading Basics A lot of traders apply trend lines for trading and making predictions on different financial markets. Trend line can also be an important element of price action patterns. However, only few knows that some trend lines are better to be avoided. In this article, I will share with you the types of trend lines that you should avoid and not rely on for making trading decisions. Invalidated Trend Line Even the strongest trend lines may lose their significance with time. Before you take a trade from a trend line, make sure that it still remains valid. If the trend line is not respected by the buyers and then by the sellers, or by the sellers and then by the buyers, we say that such a trend line lost its significance, and it is better to not trade it. Have a look at that rising trend line on USDCAD. We see strong bullish reactions to that, and we may expect a bullish movement from that, once it is tested. However, it was violated and after a breakout it should turn into a vertical resistance. Retesting that, the price easily went through the broken trend line. The trend line lost its significance, and it is better to not trade that in future. 2 Touches Based Trend Line When you are looking for a strong trend line to trade, remember that the trend line should be confirmed by at least 3 touches and 3 consequent bullish / bearish reactions to that. Above is the example of a valid and reliable trend line. However, quite often, newbie trade 2 touches based trend lines. Most of the time, such trend lines are neglected by the market. Moreover, relying on 2-touches-based trend lines, your chart will look like a complete mess. Simply because there are too many trend line meeting that criteria. Receding trend line There are the trend lines that go against your trade with time while remaining valid. Have a look at a major falling trend line on NZDCHF on a daily time frame. You may open a swing long position from that on a daily or a day trade on intraday time frames like an hourly. You can see that the market may easily go against your predictions for a long time, while perfectly respecting a trend line. The price was sliding on that trend line for 6 consequent days before it finally started to grow. Such trend lines are better to be avoided . Make sure that a trend line and your trade have the same direction. Trend lines can provide very safe points for trading entries. However, the trend lines are not equal and while some of them can be very profitable, some of them can lead to substantial losses. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
20
HARMONIC PATTERNS TRADING | ABCD PATTERN & HOW TO TRADE IT Harmonic ABCD pattern is a classic reversal pattern. In this article, I will teach you how to recognize that pattern and trade it properly. This pattern is composed of 3 main elements (based on wicks of the candles): 1️⃣ AB leg 2️⃣ BC leg 3️⃣ CD leg The pattern is considered to be bullish if AB leg is bearish. The pattern is considered to be bearish if AB leg is bullish. AB leg must be a strong movement without corrections within. A is its initial point and B is its completion point. BC leg is a correctional movement from B point after a completion of AB leg. The price may fluctuate within that. B is its initial point and C is its completion point. CD leg must be a strong movement without corrections within. C is its initial point and D is its completion point. ❗️ABCD movement is harmonic if the length and the time horizon of AB and CD legs are equal. By the length, I mean a price change from A to B point and from C to D point. By the time, I mean a time ranges of AB leg and CD leg. If the time and length of AB and CD legs are equal, the pattern is considered to be harmonic, and a reversal will be expected from D point at least to B point. 🛑If the pattern is bullish, stop loss must be placed below D point. 🛑If the pattern is bearish, stop loss is placed above D point. Initial target level is B point. Usually, after reaching a B point the market returns to a global trend. What pattern do you want to learn in the next post?
OANDA:XAUUSDEducation
by VasilyTrader
1
What is Dow Theory?The Dow Theory is a financial concept based on a set of ideas from Charles H. Dow‘s writings. Fundamentally, it states that a notable change between bull and bear trend in a stock market will occur when index confirm it. The trend that is recognized is considered valid when there is strong evidence supporting it. The theory states that if two indicators move in the same way, the primary trend that is identified is genuine. However, if the two indicators don’t align, then there is no clear trend. This approach mainly focuses on changes in prices and trading volumes. It uses visual representations and compares different indicators to identify and understand trends. Dow Theory: The Dow Theory originated from the analysis of market price movements and speculative viewpoints proposed by Charles H. Dow. It served as a fundamental building block for technical analysis, especially in a time when modern software-based technical analysis tools did not exist. Robert Rhea’s book “The Dow Theory” thoroughly explores the evolution and significance of the theory in speculative endeavours, closely examining the Wall Street Journal editorials written by Charles H. Dow and William Peter Hamilton in the 19th century. This theory represents one of the earliest efforts to comprehend the market by considering fundamental factors that provide insights into future trends. The main version of the theory primarily focuses on comparing the closing prices of two averages: the Dow Jones Rail (or Transportation) (DJT) and the Dow Jones Industrial (DJI). The premise was that if one average surpassed a specific level, the other average would eventually follow suit. Dow used an analogy to illustrate this concept, likening the market to the ocean. He explained that just as waves rise to a certain point on one side of the beach, waves on another part of the beach will eventually reach that same point. Similarly, in the market, different sectors are interconnected, and when one sector shows a particular trend, others tend to follow suit as they are part of a larger whole. The Paradigms of Dow Theory: To comprehend the theory, it is essential to grasp the various rules formulated by Dow. These principles, often referred to as the tenets of Dow theory, serve as guiding paradigms Three major market trends: The tenets of Dow Theory classify trends based on their duration into primary, secondary, and minor trends. Primary trends can be either upward (uptrend) or downward (downtrend) and can last for months to years. Secondary trends move in the opposite direction to the primary trend and typically last for weeks or a few months. Minor trends, on the other hand, are considered insignificant variations that occur over a shorter time span, ranging from a few hours to weeks, and are considered less significant than the primary and secondary trends. Primary trends have three distinct phases: Bear markets can be divided into three distinct phases: distribution, public participation, and panic. In the distribution phase, there is a gradual selling off of assets by investors. The public participation phase occurs when more individual investors start selling their holdings, leading to a broader decline in the market. The panic phase is characterized by widespread fear and selling pressure, often resulting in a sharp and rapid decline in prices. On the other hand, bull markets experience three phases: accumulation, public participation, and excess. During the accumulation phase, astute investors start buying assets at lower prices, anticipating an upward trend. The public participation phase occurs as more investors join the market and buy assets, contributing to the market’s upward momentum. The excess phase represents a period of exuberance and speculative buying, often marked by overvaluation and unsustainable price increases. Stock market discount everything: Market indexes are highly responsive to various types of information. They can reflect the overall condition of an entity or the economy as a whole. For example, any significant economic events or problems in company management can impact stock prices and cause movements in the indexes, either upward or downward. Trend confirms with volume: When there is an uptrend, trading volume rises and decreases while a downtrend starts Index confirm each other: When multiple indices move in a consistent manner, following the same pattern, it indicates the presence of a trend. This alignment among indices provides a strong signal of market direction. However, when two indices move in opposite directions, it becomes challenging to determine a clear trend. In such cases, conflicting signals make it difficult to deduce a definitive market trend. Trends continue until solid factors imply the reversal: Traders should be careful of trend reversals, as they can often be mistaken for secondary trends. To avoid this confusion, Dow advises investors to exercise caution and verify trends with multiple sources before considering it a genuine reversal. How Does Dow Theory Work in Technical Analysis? The Dow Theory played a crucial role in the development of technical analysis in the stock market and served as its foundational principle. Which, approach to analysis highlights the importance of closely observing market data to identify trends, reversals, and optimal entry and exit points for maximizing profits. As the market is considered an indicator of future performance, the application of technical analysis based on the Dow Theory helps investors make profitable trading decisions by identifying established long-term, mid-term, or short-term trends. By using this approach, investors can gain insights into market dynamics and make informed decisions to enhance their trading outcomes. In conclusion: The Dow Theory has significantly influenced technical analysis in the stock market, serving as a cornerstone for its development and advancement. By analysing the careful examination of market data, this theory helps traders to identify trends, spot reversals, and determine optimal buy and sell points for maximizing profits. The market itself is considered a reliable indicator of future performance, and technical analysis aligned with the Dow Theory assists investors in making profitable trading decisions by detecting established long-term, mid-term, or short-term trends. By using this analytical framework, investors can gain valuable insights into market behaviour and make well-informed choices to improve their trading outcomes. The Dow Theory’s enduring impact continues to guide traders in their pursuit of success in the dynamic world of stock market investing. ___________________________ 💻📞☎️ always do your research. 💌📫📃 If you have any questions, you can write me in the comments below, and I will answer them. 📊📌❤️And please don't forget to support this idea with your likes and comment
NSE:NIFTYEducation
by khushaljain023
Leveraging Pivot Points for Intraday Trading StrategiesIntroduction to Pivot Points: A pivot point serves as a pivotal indicator in technical analysis, aiding in discerning market trends across various time frames. Essentially, it's an average of the intraday high, low, and closing prices from the previous trading day. Traders interpret trading above the pivot point as indicative of bullish sentiment and below as bearish. Key Features: Pivot points form the foundation of this indicator, from which support and resistance levels are projected. These levels offer insights into potential price reversals or continuations. It's widely utilized in equities, commodities, and forex markets to identify trend shifts and reversals. Traders leverage pivot points to determine entry and exit levels, aiding in strategic decision- making for intraday trades. Formulas for Calculation: The formulas for pivot points involve simple calculations based on the previous day's high, low, and close prices. These calculations yield pivotal support and resistance levels crucial for trade planning. The Formulas for Pivot Points: P= High+Low+Close / 3 ​ R1=(P×2)−Low R2=P+(High−Low) S1=(P×2)−High S2=P−(High−Low) where: P=Pivot point R1=Resistance 1 R2=Resistance 2 S1=Support 1 S2=Support 2 ​ Calculation Method: Pivot points can be manually calculated using the prior day's data, which includes the high, low, and close prices. These levels are essential for traders, especially for intraday strategies. High indicates the highest price from the prior trading day, Low indicates the lowest price from the prior trading day, and Close indicates the closing price from the prior trading day. Interpreting Pivot Points: Pivot points provide traders with static support and resistance levels throughout the trading day. This enables traders to pre-plan their trades based on potential price movements. Traders utilize pivot points in conjunction with other indicators to enhance their trading strategies, aiming for more accurate predictions and better risk management. Comparison with Fibonacci Retracements: Pivot points and Fibonacci retracements share the common goal of identifying support and resistance levels. However, pivot points rely on fixed numbers derived from the previous day's prices, while Fibonacci retracements are based on percentage levels drawn between significant price points. Limitations and Considerations: While pivot points offer valuable insights, they are not foolproof indicators and may not work for all traders. It's crucial to integrate them within a comprehensive trading plan and acknowledge their limitations. Price movements may not always adhere strictly to pivot point levels, requiring traders to exercise caution and employ additional analysis techniques. Conclusion: Pivot points remain a fundamental tool in the arsenal of intraday traders, aiding in trend identification and trade planning. By understanding their calculations, interpreting their implications, and integrating them with other indicators, traders can harness the power of pivot points to make informed trading decisions. Disclaimer: This trading idea is for educational purposes only and should not be considered as financial advice. Traders are encouraged to conduct thorough research and exercise caution when implementing any trading strategies.
NSE:NIFTYEducation
by khushaljain023