Technical Analysis 101

Technical Analysis 101

01 – How to Start Trading in 4 Easy Steps

One of the most basic foundations of technical analysis is watching price charts. There are three popular types of charts used by forex traders and these are line charts, bar or open-high-low-close ch…

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02 – Japanese Candlestick Basics

Candlestick charting originated around the 17th century among Japanese rice traders. Munehisa Homma developed this methodology to monitor daily changes in the prices of rice in order to help him make …

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03 – Common Candlestick Formations

Single candlestick patterns are perhaps one of the most straightforward ways of reading price action and interpreting market psychology. Candlesticks with long bodies and short wicks signify strong bu…

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04 – Double Candlestick Patterns

Memorizing double candlestick patterns can be a bit more challenging, but the trading results can be very rewarding. As with the single Japanese candlestick patterns, these come in bullish and bearish…

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05 – Group Candlestick Patterns

Group candlestick patterns are more creative but take time to form. Generally, these are believed to be more effective signals when they occur on the longer-term time frames. First is the three-inside…

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06 – Support and Resistance

Support and resistance are two of the most frequent forex terms you will come across in technical analysis. Simply put, support refers to a floor in price action where a downward movement changes cour…

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07 – Trend Lines and Channels

Forex traders often say that “The trend is your friend” because a market uptrend or downtrend provides several reliable opportunities to catch pips. During these kinds of market behavior, tr…

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08 – Pivot Point Calculation Methods

Pivot point calculation can be tedious for some but there are traders that find this method very reliable when coming up with shorter-term trade setups. Trading the news or economic events can also be…

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09 – Different Types of Inflection Points

There are several types of horizontal inflection points that can be employed in forex technical analysis. Among these, the most common ones are the psychological round numbers, which tend to hold well…

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10 – Fibonacci Retracement

Fibonacci retracement levels, which are commonly used to specify potential entry levels during a trending market environment, comprise another group of inflection points. These retracement levels were…

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11 – Fibonacci Extension

As introduced in the previous section, Fibonacci extension levels serve as excellent points for setting profit targets. After all, it’s not enough that you try to pick the best entry levels for your t…

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12 – Using the Fibonacci Tool with Support and Resistance

This section further illustrates how the Fibonacci retracement and extension levels tend to have a higher probability of holding when they coincide with other types of support and resistance. For inst…

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13 – Using the Fibonacci Tool with Trend Lines

As discussed in the previous sections, Fibonacci retracement is often used during trending market environments so it makes sense to combine it with the use of trend lines. Of course this also requires…

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14 – Using the Fibonacci Tool with Technical Indicators

The use of Fibonacci retracement and extension levels could also be combined with technical indicators. For instance, one can enter at market when stochastic has already made a turn from the overbough…

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15 – How Moving Averages Work

This section covers the basic technical indicators used in forex trading, the most common of which is the moving average. As the name suggests, this kind of technical indicator measures the average cl…

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16 – Types of Technical Indicators

Technical indicators are grouped into two main classifications: oscillators or leading indicators and momentum or lagging indicators. Moving averages, as discussed in the previous section, typically f…

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17 – Using Oscillators or Leading Indicators

When it comes to using leading indicators, a good way of remembering how they work is to understand that they “oscillate” between two points, hence the name oscillator. This means that they …

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18 – Using Momentum or Lagging Indicators

As opposed to leading indicators which generate early trade signals, momentum or lagging indicators give confirmation signals when the trend has already found directional momentum. Because of that, la…

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19 – Basic Forex Chart Formations

Aside from technical indicators and Japanese candlestick patterns, another main component of technical analysis is chart formations. Remember that the concept behind technical analysis is that price…

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20 – Elliott Wave Analysis 101

A combination of repeating price patterns with Fibonacci analysis yields another branch of technical analysis known as Elliott Waves. This is named after its founder Ralph Nelson Elliott who analyzed

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21 – Understanding Harmonic Price Patterns

Harmonic price patterns comprise another set of chart formations involving Fibonacci retracement and extension levels. The rule of thumb in trading these patterns is to wait for the entire formation

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22 – How to Trade Divergences

As you’ve learned in the previous sections, technical indicators and price action tend to move in tandem. For instance, when stochastic starts heading lower from the overbought zone

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23 – Using Multiple Time Frame Analysis

While using a combination of technical indicators can help confirm price movements and filter out false signals, most traders opt to conduct multiple time frame analysis for additional confirmation.

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