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Reversal Figures. Double Top and Double Bottom |
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The second significant reversal pattern is called "Double Top and Double Bottom". It is actually two patterns that are the opposite of each other.
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Identifying Trends And Their Reversals |
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Technical analysts believe there are three types of price trends. The major or primary trend, which lasts about a year; the intermediate or secondary trend, which lasts a month or more and the minor trend, which lasts several days or weeks.
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Fibonacci |
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Leonardo da Pisa, nicknamed Fibonacci, was an Italian mathematician born in 1175 AD. He introduced Europe to the decimal system, including the concept of zero as the first digit in the number scale. Fibonacci discovered a number sequence that is named for him. The sequence is: 1,1,2,3,5,8,13,21,34 and so on to infinity. If you add the two previous numbers in the sequence, the sum is the next number. After the first several numbers in the Fibonacci sequence, the ratio of any number to the next higher number is approximately .618, and the next lower number is 1.618.
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Long And Short Positions |
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Forex traders, like stock traders, are always trying to determine whether the market will rise or fall so that they know how to position themselves. When traders anticipate that a downturn is coming and that the price of currency will drop, they execute a strategy known as a “short position” by selling the currency. Traders assume that the difference between the price at which the currency contract is sold and the price at which they will buy it back after the price drops will provide them with a significant profit.
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Reversal Figures. Swing and Failure Swing. |
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A “swing” is the length of movement between the extreme high and the extreme low of a currency price. When the price goes back and forth like this for a period of time, the currency is said to be trapped in a sideways trading range or a swing. For this to be a true trend the analyst must be able to identify clear support and resistance levels that create the boundaries of the swing. In other words, the price never goes above a certain level (resistance) and never goes below a certain level (support). The price truly swings back and forth between highs and lows.
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Trends |
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Traders watch the markets to determine trends. A trend in simple terms is a single direction the market is headed for a defined period of time. Trends are broken down into three categories: major, intermediate and short-term depending on the length of time the direction holds steady. The three directions in which a trend can move are up, down, and sideways.
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Flags and Pennants |
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A "flag" is a chart pattern that looks like a rectangle with a pole on either side. This pattern develops because prices move within a narrow range. Flags identify the currency price’s consolidation that comes before the previous move resumes. A consolidation is the movement of a currency’s price within a specific pattern or barrier of trading levels. The support/resistance levels form the barriers.
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| Symbol |
Rate |
| GBP:CHF |
1.747703 |
| GBP:JPY |
155.484239 |
| GBP:USD |
1.638403 |
| NZD:USD |
0.627050 |
| EUR:CAD |
1.545998 |
| EUR:CHF |
1.516857 |
| EUR:GBP |
0.867915 |
| EUR:JPY |
134.947096 |
| EUR:USD |
1.421994 |
| AUD:JPY |
76.394373 |
| AUD:USD |
0.805000 |
| USD:CAD |
1.087204 |
| USD:CHF |
1.066711 |
| USD:JPY |
94.899879 |
| USD:SEK |
7.613010 |
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Disclimer: This website is for informational purposes only and is not intended to provide
specific commercial, financial, investment, accounting, tax, or legal advice.
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© ForexCenter.com, 2005, All Rights Reserved
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History