Forex Chart ; Symetrical triangle pattern

This pattern shows two converging trendlines (support levels & resistance levels) and is (1) a bearisch formation that usually forms during a currency pair downtrend as a continuation pattern (downtrend will continue) or (2) a bullish formation that usually forms during a currency pair uptrend as a continuation pattern. (uptrend will continue)

This pattern is confirmed when the currency pair price breaks out of the symmetrical triangle formation (1) to the downside and closes below the lower support trendline in order to continue the downtrend or (2) to the upside and closes above the upper resistance trendline in order to continue the uptrend.

What does a Symmetrical Triangle Formation look like?


The symmetrical triangle is marked by two important trend lines. At its top, there is a line of resistance where traders are willing to sell the currency pair. This resistance line communicates the fact that bearish currency traders are over time willing to pay lower and lower prices for the currency pair indicating a possible break out to the downside.

At it's bottom, the support line communicates the fact that bullish currency traders are over time willing to pay higher and higher prices for the currency pair indicating a possible break out to the upside.

How to trade this pattern?

For it's best prediction, an established trend should exist, either a strong down or a strong uptrend. Once the currency pair breaks out the symmetrical triangle, most likely, the price will continue it's previous trend.

Trade the breakout!

Chart example



Please note how the previous trend is an uptrend, once it breaks out the symmetrical triangle, it's uptrend continue!

Forex ; Trendline Support and Resistance

The trendline. A trendline is a main initial element for the price chart analysis. While the market moves in any direction not along a straight line but along a zigzag, the mutual placement of upper and bottom points of those zigzags permits to plot a line connecting the significant highs (peaks) or the significant lows (troughs) of an appropriate zigzag using technical tools of the computer program.

To draw a trendline only two points are necessary and the third one is the contact point confirmation. On a bullish trend chart it should be drawn using troughs, on a bearish  using peaks. The trendline and a line which is about parallel to it and drawn on the opposite side (through peaks on a bullish trend and through troughs on a bearish) form the trade channel. Both lines are then channel's borders.

Lines of support and resistance. The upper and the bottom borders of trade channels are called accordingly support and resistance lines. The peaks represent the price levels at which the selling pressure exceeds the buying pressure. They are known as resistance levels. The troughs, on the other hand, represent the levels at which the selling pressure succumbs to the buying pressure. They are called support levels. In an uptrend, the consecutive support and resistance levels must exceed each other respectively. The reverse is true in a downtrend. Although minor exceptions are acceptable, these failures should be considered as warning signals for trend changing.

The significance of trends is a function of time and volume. The longer the prices bounce off the support and resistance levels, the more significant the trend becomes. Trading volume is also very important, especially at the critical support and resistance levels. When the currency bounces off these levels under heavy volume, the significance of the trend increases.

The importance of support and resistance levels goes beyond their original functions. If these levels are convincingly penetrated, they tend to turn into just the opposite. A firm support level, once it is penetrated on heavy volume, will likely turn into a strong resistance level. Conversely, a strong resistance turns into a firm support after being penetrated. In general, to evaluate the reliability (that is the possibility of a break) of the trade channel borders taking a decision to close or to save an existing position one should govern himself with following rules:

1. A channel is the more reliable the longer it exists. Hence, the solidity of very old channels (e.g. existing more than 1 year) decreased sharply.
2. A channel is the more reliable the more is his width.
3. The resistance may be broken if it is bounced on the background of a growing volume.
4. A steep channel is less reliable in compare to a gentle one.
5. The support may be broken independent on the volume.

----- SBJ --- by; T.Anderson -----

Forex Forecasting ; The Elliott Wave Principle

Developed by Ralph Nelson Elliott in the 1930s, the Elliott wave principle is a very popular technical analysis tool that allow traders to forecast trends in the foreign exchange market or any other financial market such as the stock market.

The Elliott Wave Theory was developed due to the fact that financial markets are traded in five distinct waves going in the direction of the main trend followed by three distinct waves going against the main trend that can be forecasted with an understanding of crowd psychology.

Understanding Elliott Waves

According to Ralph Elliott, currency pair prices move in waves, five impulsive waves and three corrective waves (a "5-3" move). Impulsive waves move in the main direction of the trend and corrective waves move against the main up-or down trend.

Let's take a look at the following Elliott Wave pattern for better understanding:


Impulsive and Corrective Waves
To fully understand the Elliot Wave Theory, it is important to understand the psychological rationale for each of these waves since the zigzag movement of prices represents the ebb and flow of investor optimism and pessimism. Given an uptrending market:
Wave 1 (Impulsive): Minor Upwave In Major Bull Move – In Wave 1, prices rise as a relatively small number of market participants buy a currency pair for either fundamental or technical reasons, pushing prices higher.
Wave 2 (Corrective): Minor Downwave In Major Bear Move - After a significant run-up, investors may get fundamental or technical signals indicating that the currency is overbought. At such time, Wave 2 develops when original buyers decide to take profits while newcomers initiate short positions. Price action reverses, but generally does not retrace beyond its initial low that attracted buyers at Wave 1.
Wave 3 (Impulsive): Minor Upwave In Major Bull Move - Often the longest wave of the five, Wave 3 represents a sustained rally, as a larger number of investors use the Wave 2 dip as a buying opportunity. With a broader range of
buyers, the security enjoys a stronger push higher, with prices extending beyond the top formed at Wave 1.
Wave 4 (Corrective): Minor Downwave In Major Bear Move - By Wave 4, buyers begin to become exhausted and again take profits in reaction to overbought signals. Generally, there is still a fair amount of buyers, so the retracement here is relatively shallow.
Wave 5 (Impulsive): Minor Upwave In Major Bull Move - Wave 5 represents the final move up in the sequence. At this point, buyers as a whole are motivated more by greed than any fundamental justifications to buy, and bid prices higher irrationally. Prices make a high for the move before a correction or reversal ensues. The high in Wave 5 often coincides with a divergence in the relative strength index (RSI).

This is a view including the correction wave that follows the basic Elliott Wave:



A-B-C Corrective Waves*

Wave A: Correction To Rally – Initially Wave A may appear to be a correction to the normal rally. However, if it breaks down into five subwaves, it indicates that a new market trend may have developed.
Wave B: Bear Market Correction – Wave B tends to give bears an opportunity to sell as others take profit on their short trades or exit their long positions.
Wave C: Confirms End Of Rally – Wave C is the last wave of the cycle. At this point, Wave 3 typically breaks key support zones and most technical studies confirm that the rally has ended.

Minimize Forecasting Errors With Elliott Wave*
Since many different waves can exist during the same time frame, increasing the risk of forecasting error, traders should follow certain rules to minimize risk. The most important of which is to follow the principle that the “the trend is your friend.”

This means that it is more prudent to only look for opportunities sell into minor waves when the major wave is a downtrend and to buy when the major wave is an uptrend. More rules can be used though to determine levels for placing stop-loss orders or to exit the trade.

Fibonacci ratios are one of the most useful ways of identifying possible peak or
bottoms of wave cycles. A popular relationship that exists is that Wave 2 retraces 38% of Wave 1. 50% and 61.8% retracements are also frequently seen.

Below is an example of a five-wave move up in GBP/USD:


------- SBJ ---- by; Jim Fot ------

See Forex Signal Indicator ..... click here

Forex Technical Indicators

If you are new to forex trading, do you know which types of technical indicators are for what kinds of usage? And if you are already an experienced forex trader, are you using the correct combinations of technical indicators to help you profit consistently in the forex market If w:you are still not sure, we'll discuss the following 4 different types of forex technical indicators below
1. Trend Indicators - Also known as Directional Indicators. I have always reminded my students, 'Trend is your best friend and always trade in the direction of a trend'. A forex trend may be quite subjective to different traders as they may have different views on trendiness. So those trend indicators out there in the forex market can help traders detect the starting and ending of a trend. Some of the more popular trend following indicators includes MACD (Moving Average Convergence Divergence), MA (Moving Average), Parabolic SAR. Depending just on trend indicators is not enough, you may need Momentum Indicator(s) to enter and/or exit a trade.
2. Momentum indicator - Also known as Strength Indicators. It is described as the speed of a move in price over a period of time. They are oscillators which are able to indicate whether the forex market is in the overbought or oversold regions. If they have risen to the overbought zone, there is high possibility that the price will be going down, and if they have fallen to oversold zone, there is high possibility price will be going up. Some of the more popular oscillating indicators in forex trading include Stochastic, Momentum, RSI (Relative Strength Index), CCI (Commodity Channel Index).

3. Volatility indicators - Also known as Bands Indicators. Often, a change in volatility will lead to a change in price. Therefore, we can see how active the forex market is just by looking at the price ranges. You may want to trade when there is a dramatic change in price movements, which suggests that the market is actively trading forex
. Some of the more popular Volatility Indicator includes BB (Bollinger Bands, ATR (Average True Range), Price Envelopes

4. Volume indicator - They are used to show the volume of forex trading and are useful to confirm the direction of a trend, a reversal or a breakout. Price movements increase when the volume increases, low volume may warn of a reversal in a forex trade. If a currency pair trades from a narrow range and then breaks out on high volume, this is a strong signal and may suggest a breakout. Some of the more widely used Volume Indicator includes DemandIndex, Chaikin Money Flow, Money Flow Index, Ease Of Movement, OBV (On Balance Volume).
I'm sure that after the above discussions, you should have a better idea of the different types of forex technical indicators. While they can greatly help you in technical analysis and make trading decisions, I want to stress that NO forex indicators is holy grail. The
indicators are just a confirmation of history and a guide for the future. Most importantly, you need to know the right combination of the forex technical indicators to get you profitable consistently in the long haul. You can find a forex trading system which has a very good combination of indicators in my forex ebook which I give for FREE. Good trading to all.

---- SBJ ---- by; Danniel s ------

Forex H4 Bollinger Band

Open the 4 hour chart and choose whatever currency you want.
Insert the Bollinger Band (20) indicator and be sure that its center line is appearing.
Identify 2 valid lower points OR 2 valid higher points in the Bollinger Band and drop a line from the first to the second line; it will be our break line.
Now when a candle closes above the break line issued from the higher points and in case the center line of the Bollinger band in the 1 hour chart crosses the break line then we have a LONG Trade.
If the candle in the 4 hours chart closes under the break line issued from the 2 lows points and in same time the center line of the Bollinger band crosses the break line in the 1 hour chart, then we are in a SHORT trade.
If the candle in the 4 hours chart closes under the break line issued from the 2 lows points and in same time the center line of the Bollinger band crosses the break line in the 1 hour chart, then we are in a SHORT trade.
I will give an example:
Open the 4 hours chart, open NZD/USD currency and locate the date 2008/1/16 2:00 AM EST



You can see the breakLine I dropped; it is a 2 lows points Bollinger Band which I mention it above


Now wait till a 4 hours candle break the BreakLine, you can see the candle (A) first breaked the Breakline, but is it a valid Sell Entry ? we must confirm it. So we open the 1 hour chart and locate the same Point (A) in the 1 hour chart.



We look at Point (A) in H1 and we locate its center Line (The Center Line of The Bollinger Band), as you remark that the center line didn't cross the Break Line as the candle A did; so it is not a valid sell entry, and as you can see the price go up again. So we wait another opportunity.
We reopen the H4 (4 hours chart) and wait till point (B) is formed, we see the H4 candle crossed the BreakLine, is it a valid sell entry ? we open the H1 chart and locate the Candle (B) , we look at the center\ line we see the center line crossed the breakLine so we do a short because we confirm the sell entry.

----- SBJ ---- by; RpcHost – E. Revy ----

Forex CCI Divergence Breakout

Timeframe : 15mins and above
Indicator : CCI (Commodity Channel Index
Description : This strategy uses hidden divergence and price action to take a breakout trade. Divergence is the one
key indication in the market that can be useful and is not lagging. It is a sign of a market reversal coming up in the near future. Understanding and making use of divergence will help a technical trader greatly when analyzing the market.


Note : On my CCI, I always connect my peaks (tops) never the bottoms (dips).

Long Breakout

- Price must be trending downwards
- CCI must go towards the upward direction and bounce
- After a bounce on the CCI, connect your high peaks on your price
- Aggressive : At a clear close above the trend line enter long
- Conservative : After the trend line is broken, wait for a pullback to the trend line to enter

Short Breakout
- Price must be trending upwards
- CCI must go towards the downward direction and bounce
- After a bounce on the CCI, connect your dips on your price
- Aggressive : At a clear close below the trend line enter short
- Conservative : After the trend line is broken, wait for a pullback to the trend line to enter

Stops
- If your trend line is not that steep, you can keep your stops at the high/low of the breakout candle.
- If your trend line is steep, keep your stop at the swing high/low
- If your trend line is medium steep, keep your stop at the low of couple candles away

Exits
- 1:1 Risk to reward. If your stop is -12 pips your limit should be +12 pips.
- Open 2 lots. If your stop is at -10 pips, once your trades goes in your favor and you're at +10 pips, close 1 lot and let the other one run. Exit at Support and Resistance levels.
the other one run. Exit at Support and Resistance levels.
- Exit at the nearest 50 or 00 level. These are psychological levels. (make sure your exit is at least the same number
of pips as your stop, otherwise dont enter the trade)
- Trailing Stop. Once in a trade, at the close of each candle, place your stop 1 pip below the low (if in a buy trade). Vise versa for sell trade.

Short Example

Long Example


------- SBJ ------ by; Navin prithvani ------