Tag Archives: Chart

Forex Trading Articles

Trade Triangle Chart Patterns on MT4

Triangle chart patterns are the most traded chart pattern in currency trading. There are three types of triangles most traded in currency trading:

Triangle Chart Patterns

•symmetrical triangles

•ascending triangles

•descending triangles

Triangle Chart Patterns are Easy to Identify on Forex Charts

Identifying triangle chart patterns is easy when a complete technical analysis has been carried out. Locate 2 higher highs and 2 lower lows. Next, draw a line through them. Join at least 2 lower lows with one line, and 2 higher highs with another line, and you’ll have a nice triangle chart pattern. You have just identified a trade-able chart patterns most traded in forex trading. A minimum of four ‘bounces’ should be observed before this triangle formation can be considered a reliable pattern to trade with.

Research by Thomas Bulkowski and many famous technicians indicate that price often breaks out of the symmetrical triangle ahead of the price at which the 2 trendlines converge, which is labelled the apex. From the point where the triangle begins, research shows that most triangles break out of either the upper or lower trendline anywhere from the 66 percent and 75 percent of the way to the apex, though some triangles break out at the apex.

An important Caveat on Directional Biases

There is one major caveat to know when working with triangle chart patterns. In most technical analysis books, it is found that ascending triangles are described as bullish continuation patterns and descending triangles are described as bearish continuation patterns. From our experience, if you classify triangle chart patterns as such, you are doing a disservice to yourself.

Ultimately, we should not try to predict which direction price will break from triangle chart patterns. That’s not to say that ascending triangles cannot meet their upside breakout targets or that descending triangles will not break to the downside targets. They do.

However, when thinking of these triangle chart patterns in terms of risk/reward and edge, it’s best to treat them without directional bias and take advantage of the principle of range expansion following range contraction instead of the complexity of trying to predict which direction price will break-out.

In fact, you will likely find that some of the best trades will come from triangle chart patterns that break opposite of their expected directional bias. This is because traders who think that ascending triangles will -always break to the upside will be forced to sell their forex contracts as they stop-out when the ascending triangle breaks unexpectedly to the downside, and these traders stoping out, when combined with sellers entering new short-sale positions as a result of the confirmed triangle chart pattern entry will create a positive feedback loop that propels price to achieve the unexpected downside target. Knowing this is a major benefit when anticipating where or how to enter a potential triangle trade.

As such, we should use trendline-break EA found on MT4 to draw not just a buy pending order on a ascending triangle chart pattern, but also sell a pending order on the chart pattern as well. When breakout happens either to the upside or downside, the trader can participate on the breakout regardless of its direction. This process of placing buy and sell pending orders on triangle chart patterns can now be automated by commercialized software or robots.

In regard to where are best to enter trades in triangle chart patterns, we turn back to conservative versus aggressive tactics. An aggressive trader would put on a position immediately as price begins to break above the upper trendline or beneath the lower trendline without waiting for further confirmation signal. Conservative traders have a variety of entry strategies, including entering only as price breaks above a strong bullish breakout candle like a bullish engulfing or beneath a strong bearish candle.

Thanks to technology, there are commercialized robots programmed specially for traders to trade triangle chart patterns on automation. Whether the trader trades aggressively or conservatively, entry based on trendline-breakout or price breaks and closes beyond trend line, each of these style of trading can be personalized and programmed to work in the absence of the trader at the computer screen.

Reducing False Breakouts Trading Triangle Chart Patterns

A time filter can be introduced to reduce the possibility of false triangle break-outs outside the specified trading time frame. Generally, most genuine breakouts happen during active Forex trading hours and 30 minutes after the opening bell of the market session.

Another way is to introduce indicators like ADX and to factor in the ADX values before considering whether to trade breakouts or to fade breakouts. Reducing the likelihood of the false breakout, I will like to see that the ADX is below 15 value for some time. And the longer it stays below 15, it will mean that market is attempting and preparing for a big movement. It will be a very good opportunity to trade triangle chart patterns.

Market Analysis

Forex Live Chart – What You Ought to Know About Charts

Forex live chart is a necessity if you are planning to do your own market analysis. ‘Live’ here means the service that provide it will use current actual market data to create the chart. Basically, it is a very useful information tool to have even if you don’t do your own analysis.

First of all, you have to pick the currency pair that you want to analyze; it usually comes in the form of a drop down menu. Once you get the one that you want, select the chart type, it typically is available in four forms: Line, Bar, Candlestick, and Table. If you are a beginner, I suggest to begin with a Bar type. Once you select the type, choose a time frame such as one minute, five minutes, daily, weekly, etc.

In a bar chart, every vertical bar which you see signifies a time frame. The top of the bar is the highest price and the bottom of the bar is the lowest price during that particular time frame. For each vertical bar, there are two horizontal bars, one to the left and the other to the right. The left bar represent the opening price and the right bar represent the closing price for that time frame. Note: Utilize the zoom feature to see it in detail.

If you are going to use forex live chart, you should at least know these things:

Understanding Support and Resistance

The market volatility can bring it anywhere and no one can predict it 100%. But based on historical data, there are some condition where the price doesn’t exceed or below a certain price for a period of time.

Instance:

-From July to December, the EUR/USD prices never go beyond 1.645, that means 1.645 is the resistance for EUR/USD during that time period.

– From January to May, the USD/JPY prices never fall under 90.070, that mean 90.70 is the support for USD/JPY during that period of time.

Entry and exit point can be decided based on these support and resistance data. An orthodox approach is buy at support and sell at resistance. There is also more advanced strategy such as buying at resistance breakout and sell at higher price; it is all depend on the currency, circumstances, and your trading system.

Note: A time when the price has moved passed support or resistance line is called breakout.

Indicators

A good chart software also allows you to add various indicators. Indicator is a mathematical calculation based on prices which you can use to help you come up with decision. For instance: MVA indicator can present you the average price for a particular period, EMA show you the weighted price calculation for a certain period, etc.

Forex live chart can be used in various other ways to support a trader and understanding the basic function is a good start for your trader career.

Forex Trading Articles

Forex Triangle Chart Patterns

As we, all know the trend lines form the chart patterns and trend lines are set by connecting the highest points or the lowermost points of the Forex trade.

Thus, the converging trend lines indicate the triangle chart patterns that forms a triangular patterns. They are easy to mark and interpret results easily.

The triangle chart patterns of Forex trends are set as a unique group of patterns that are different from other chart patterns that are used to explain various conditions of the Forex trading market.

This pattern is set when the lines from higher price value and the lines of lower price value combined to form a triangle chart pattern.

The types of triangle chart patterns are symmetrical, descending and ascending triangle chart patterns.
The symmetrical triangle chart is formed when none of the buyers or sellers handles to trade at the price movement.

The lines of the triangle are closing the gaps between the two price ranges where a Forex trader anticipate for the breakout.

At some point where the competition stops and one out of the buyer or sellers finally give up. When the hurdle formed by these triangles is broken down then a distinct price action follows the movement further.

Ascending Triangle Pattern:

This trend generally moves upward and indicates about the upward moving trend of the price action. It is essentially an upturned descending triangle and as it is a triangle it hypotenuse that used to moves upward with each fraction of time. After this upward moving trend, there comes a straight moving trend line and traders are watching attentively this trend for the important resistance point for further trading. As this is the right time to make buying decisions at the Forex trading market.

The article gives brief explanation about the triangle chart patterns indicating the Forex trend movement and this chart pattern is set aside from other chart patterns, as they do not match to other patterns in any way. Thus, these patterns have unique signals of price movement.

Forex Trading Articles

Forex Trading Times Chart – Trading Forex on Multiple Time Frames

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Forex Trading Times Chart

One of the most common mistakes of new traders is to take a trade while looking at a trend from only one time frame. Every single trader has a time frame he/she prefers to focus in on, whether it be day chart, week charts or even 5 minute charts. The problem arises when you are looking only at your own chart level without looking to a higher chart level for confirmation of a trend.

The reason it’s so important is because the longer a resistance level develops, the more powerful the resistance is. So if there is a tremendous catalyst on the day charts that has been hit numerous times over the past few months without a break in the trend, and you are looking for confirmation solely on the hour charts for the formation of an ascending triangle that will break the pattern, you may be sorely disappointed.

The day chart indicates a weakening upward momentum on which there is not sufficient buying energy to break the catalyst, even though the hour charts are a sure indication that the price will break through. So you buy, and get stopped out immediately. It’s a common and simple mistake, which means it’s easy to analyze and fix after it’s been made, but don’t let it continuously happen to you. Here’s a few tips to help avoid getting caught looking at the trees and missing the whole damn forest on your time charts: Forex Trading Times Chart

1. Always check two time frames higher than your own for confirmation of a trend. The higher time frame should act like an essential secondary indicator before you place a trade to make sure that the pattern holds up both on your time frame and the higher time frames. If you trade hour charts, check the day and week charts before pulling the trigger. Day chartists should check the week and month charts beforehand, and so forth.

2. Do not attempt to analyze more than three chart levels in any trade. This can lead to a great deal of over analysis that is completely unnecessary. Once you start delving into ridiculous complexities on technical analysis, you lose the benefit of self fulfilling crowd psychology because not every single trader is going to look at nine chart levels before trading. On top of that, you just over think the trade and lose the chance to grab what could actually be a very good opportunity. Forex Trading Times Chart

Market Analysis

Chart Analysis Made Easy For All

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Chart analysis has become more popular than ever. One of the reasons for that is the availability of highly sophisticated, yet inexpensive, charting software. The average trader today has greater computer power than major institutions had just a couple of decades ago. Another reason for the popularity of charting is the Internet. Easy access to Internet charting has produced a great democratization of technical information. Anyone can log onto the Internet today and see a dazzling array of visual market information. Much of that information is free or available at very low cost.

Chart analysis (also called technical analysis) is the study of market action, using price charts, to forecast future price direction. The cornerstone of the technical philosophy is the belief that all of the factors that influence market price-fundamental information, political events, natural disasters, and psychological factors- are quickly discounted in market activity.

In other words, the impact of these external factors will quickly show up in some form of price movement, either up or down. Chart analysis, therefore, is simply a short-cut form of fundamental analysis. Consider the following:A rising price reflects bullish fundamentals, where demand exceeds supply; falling prices would mean that supply exceeds demand, identifying a bearish fundamental situation. These shifts in the fundamental equation cause price changes, which are readily apparent on a price chart. The chartist is quickly able to profit from these price changes without necessarily knowing the specific reasons causing them. The chartist simply reasons that rising prices are indicative of a bullish fundamental situation and that falling prices reflect bearish fundamentals.

Another advantage of chart analysis is that the market price itself is usually a leading indicator of the known fundamentals. Chart action, therefore, can alert a fundamental analyst to the fact that something important is happening beneath the surface and encourage closer market analysis.