Technical Analysis

Overview

We usually combine swing trading with pivot points to do short-term technical analysis; nevertheless, the study and definition of swing trading, trend direction and pivot points in the market is essential for further use in forex trading studies (with or without technical indicators).

Lets focus on explaining the following terms:

• Up swing - changing direction from down swing and marking support line (pivot point).
• Down swing - changing direction from down swing and marking resistance line (pivot point).
• Double Top formation
• Double Bottom formation (opposite from double top)

Chart #01	Chart #02

Indicators and Parameters:

Bar Chart (black) - open, high, low and close; only the highs and lows are important.
Support Line (red) - drawing a support line (pivot point) after a valid change in direction from down-swing to up-swing.

Overview

This tutorial will focus on two key reversal candlestick formations - The Bearish/Bullish Engulfing and The Harami Cross.

When using Japanese Candlestick Charting these patterns signaling a reversal in last trend direction.

In this tutorial, Yahoo Japanese Candlestick Chart, you will learn the practical use of these two key reversal candlestick formations when combined with trend lines channel as our entry and exit tool.

		Doji: The open and close prices are the same or very close. In candlestick charting we use this formation with many important patterns.
		Bullish Engulfing: A small red body followed by and contained within a large green body. Usually a sign for a major bottom reversal.
		Bearish Engulfing: A small green body followed by and contained within a large red body. Usually a sign for a major top reversal.
		Harami Cross: A Doji contained within a large red body. Usually a sign for a bottom reversal.

Case study - Yahoo Stock (^YHOO) Japanese Candlesticks Chart

Indicators and Parameters:

Candlestick Chart - you can find this option at any technical analysis charting software.

Trend Lines Channel (blue) - this price fluctuation channel formed from two parallel trend lines (in mid April); see points 1,2,3 and 4.

Overview

In this trading tutorial we use Bollinger bands analysis with simple, yet powerful, momentum indicator to identify turning points in trend direction. Please note: Bollinger Bands indicator belongs to the volatility indicators group.

It is necessary that we add one or more momentum/strength indicators to Bollinger Bands in order to determine trend phase. Is price action (movement) in the beginning, middle or end.

Case study - Forex (Foreign Exchange) EUR/USD Bar Chart

Lets focus on the final stage of this trend...

Bollinger Bands (blue) - period set to 20, deviation set to 2 (default parameters), i.e. 98% of price movement will take place inside the bands.

Continue reading "Bollinger Bands Analysis ... »