Author Archive
Flags Signals In Forex Chart Analysis
Posted by: | CommentsFlags Signals In Forex Chart Analysisforex chart 18,100 18,100 CA$5.14, 5/424=1.2%forex chart analysis 320 320 CA$4.95, 5/424=1.2%flag pattern 5,400 5,400 CA$0.51, 8/424=1.9%currency pair 3,600 3,600 CA$7.16, 5/424=1.2%Word Count: 424
Tracking the rise of your currency pair using chart analysis sometimes give us several periods and several consecutive upticks. But for the past few periods, the price looks to be trending sideways. Up and down-range bound. If this is something youve experienced, then hopefully you were able to hang in there for a while until you were able to confirm either a trend continuation or reversal.Chances are that the currency pair was setting up a flag pattern. Usually, in forex chart analysis, a flag pattern marks a consolidation period that will result in the continuation of the original trend. As the price of a currency pair trends-either upward or downward-at some point there will a brief period of consolidation, and even retracement. The trend basically appears to have lost its original momentum. And the price of the currency pair becomes range bound-moving up and down between resistance and support.When the resistance trendline and the support trendline are parallel, then this is a flag pattern. In its idealized form, the price bar zigzags between support and resistance levels that are always at about the same level. Some traders also refer to this pattern as a parallelogram pattern.In reality, this pattern coming out of an uptrend could actually result in lower lows and lower highs each time it touches a support or resistance trendline. This is why some traders who use forex chart analysis will refer to this as a retracement pattern. In the case of a downtrend, the flag pattern will temporarily retrace to higher highs and higher lows.Many traders who use forex chart analysis believe that once there is a breakout, the trend will continue by at least as much as the trend leading into the flag pattern. This is why these traders call this pattern a half mast pattern-the flag appears halfway up the mast that is formed by the prevailing trend of the currency pair.Other, more conservative traders, believe that the breakout from a flag pattern will result in a continuation of the trend by at least as much as the gap between the high and low of the trading range while in the flag pattern.When you encounter a flag pattern in your forex chart analysis, you need to remember one important fact. Even though it is usually identified as a continuation pattern, it is also possible for it to be the beginning of a trend reversal. So you should always incorporate some form of confirmation and contingency in your analysis.
Triangles Point to Forex Profit
Posted by: | CommentsTriangles Point to Forex Profitforex chart 18,100 18,100 CA$5.14 6/492=1.2%forex chart analysis 320 320 CA$4.95 5/492=1.0%currency pair 3,600 3,600 CA$7.16 8/492=1.6%Word Count= 498
While analyzing a trending currency pair, sometimes, a very special triangle pattern will emerge. What in the world is this? Very simply, it actually indicates a lack of confidence on the part of buyers, sellers and sometimes even both! We call this the period of consolidation as market participants try to determine the longer term price action of the currency pair.
Statistically, it has been shown that when a triangle pattern shows up in a forex chart a, the trend will stay intact. But keep in mind that the numbers are not so overwhelming that you wont need to look for confirmation from some other indicator. Either way, its important to know what a triangle looks like, how it forms, and most importantly, what to do when you see it.There are three types of triangles-symmetrical, ascending and descending. Here is what yo need to look for in each one.The Symmetrical Triangle and Forex Chart AnalysisIn general, a symmetrical triangle pattern will confirm the existing trend-either up or down. When you look at it, you can almost see the battle for control of pricing direction by the traders of the currency pair. Like all triangles, it will announce itself as a disruption in the trend. Remember, an uptrending currency pair will have higher highs, and higher lows. While a downtrending currency pair will have lower highs, and lower lows. When a symmetrical triangle forms, it will have lower highs, and higher lows. This indicates that the sellers are not so confident in their position as to hold out for a better price. While the buyers are not so confident that theyll wait for a lower price.The Ascending Triangle and Forex Chart AnalysisAn ascending triangle will usually confirm a long position in a currency pair. It forms when there are higher lows but the highs remain at pretty much the same level. This indicates a temporary lack of confidence by buyers that the price will increase beyond the resistance level.The Descending Triangle and Forex Chart AnalysisA descending triangle pattern usually confirms a short position in a currency pair. It forms when there are lower highs but lows stay at about the same level. This shows a temporary lack of confidence by some short sellers that the price will fall below the support level.Triangles will always break out before they get to the end of the pattern. So you need to be prepared to act as the resistance and support lines close in on one another. This would mean either waiting for confirmation of the direction of the breakout or acting in advance of the breakout.In general identifying a triangle formation in a forex chart analysis is not very difficult in a trending currency pair. Its more important to know how to react to it when it does show up. So just follow the three steps. Identify. Look for confirmation. Then react.
Forex Analysis in Rising and Falling Wedges
Posted by: | CommentsForex Analysis in Rising and Falling Wedgesforex chart 18,100 18,100 CA$5.14 9/420=2.1%wedge pattern 1,600 1,600 CA$0.98 6/420=1.4%currency pair 3,600 3,600 CA$7.16 7/420=1.7%Word Count: 420
I consider Forex Charting as a form of art more than an exact science and the appearance of a wedge pattern proves it quite radically. A wedge pattern is very similar to both pennants and triangles, They mark a point of indecision or consolidation in the direction of the underlying currency pair. Opportunity?When a wedge pattern shows up in a downtrending currency pair, the forex chart will show two converging trendlines. When the convergence results in higher highs and higher lows, it is known as a rising wedge. In this instance it usually indicates that a downtrend is intact. The forex chart will let you visualize the final attempts by suppliers to move the price upwards as they hold onto the currency pair. But when demand at last fails to materialize, the downtrend will resume.When a currency pair is uptrending, a wedge pattern would once again be identified by its two converging trendlines. When this convergence results in lower highs and lower lows, its known as a falling wedge. In this case it will look like buyers are trying to move the price lower and lower until there are no traders left to supply the currency pair at these lower prices. This is when the uptrend continues. Forex chart analysts should take note, when a rising wedge appears in an uptrending market, its usually a sign that the partys over. And the same holds true when a falling wedge shows up on the forex chart of a downtrending currency pair in which case, shorts should be prepared for a trend reversal.Not very intuitive since most people will associate a falling pattern with a downtrend continuation and a rinsing pattern with an uptrending continuation. But for a wedge pattern to be a continuation indicator, it must show up in a forex chart as a retracement pattern-moving against the prevailing trend.Its also important to note that from a forex chart analysis perspective, some traders expect that a breakthrough will result in a move that would be equivalent to the height of the wedge when the pattern first forms.As you can see, the wedge pattern in a forex chart demonstrates many of the uncertainties around using forex chart analysis for trading a currency pair. From its similarities with other continuation patterns to its interpretation as being both a continuation pattern and a reversal pattern. Thats why its so important that you always use at least one other indicator to confirm any continuation or reversal pattern.
