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VIDEOS | FUNDAMENTAL STRATEGY Sat 16 Mar

Video: Why central banks keep getting it wrong

Why central banks got it wrong last year Central banks wildly overestimated the landscape in the global economy and markets. They can't raise rates because consumers and businesses can't survive in the world that central banks want to live in and they don't understand how market psychology trumps their models. Want to know when we've got a new video out? Click here to subscribe to our YouTube channel . ForexLive

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FOREX OPTIONS ORDERS FIXES | EDUCATION FROM BROKERS Wed 13 Mar

How bank trade recommendations work

What are the keys to understanding how bank trade recommendations work With so many trade recommendations available online from a variety of different banks how do they work and, more importantly, how can you make then work for you? Bank trades are often based upon monetary policy of central banks The currency markets don't just move at random. They move for a reason. Every developed nation has a central bank that has a core duty to ensure currency stability and that the interest rates of their nations are correctly set. Contrary to what some people might think, central banks want to inform the market about their intentions. They do this in order to ensure that price remains stable and under control and so as to avoid large volatile swings in price. A volatile currency is bad for domestic businesses as they import and export goods, so central banks release information in order to assist traders in pricing their currency. The vast majority of bank trade recommendations work by studying central bank's forward guidance and making it clear which direction they think the currency will go in. So, for example, at the time of writing 8 April, 2019, Barclays opened a EUR/USD short position from 1.1310 after the ECB was dovish concerning future rate guidance on March 7. Barclays said that, 'our short EUR/USD recommendation by the manifestation of many of the factors that represent a nearly complete reversal of the developments that boosted EUR/USD from its cycle low at the end of 2016 to 1.20'. The trade was opened as a direct response to the ECB's dovish shift in monetary policy. Use bank recommendations by comparing multiple sources The single most useful aspect of trade recommendations is the collective resources they bring to you. In having a continuous stream of sentiment interpretation and trade recommendations from many different sources you have a very good idea of what different players are thinking and how they are placing their orders. It is particularly interesting and illuminating to compare conflicting views. For example, let's say you get one trade recommendation to go long on the USD/JPY and another one to short USD/JPY, you can read into the detail and see the reasoning for them.  Whose argument best stacks up with the facts? Have they both considered the same key points, or has one recommendation been guilty of confirmation bias and simply ignored all contradictory data? You might like to read bank recommendations to see if you are missing any key fundamental data in your analysis. Sometimes, you will find a factor mentioned that you have overlooked. Use bank recommendations to gain insightful information You will also find that you can glean decent information by reading a variety of sources. You will come across multiple factors, some of which you would not have considered before Use bank recommendations to recognize key fundamental shifts Some trade recommendations are given after key central bank decisions and statements. The trade suggestion may highlight that shift to you and mean that you start to develop a bias for that market, long or short. Use bank recommendations to recognize key technical levels Some trade recommendations come out simply because price is at a major turning point. So, it could be because price is at a key weekly horizontal resistance and support level or a fib level. Often by looking at the trade recommendation you may be alerted to price being at a key inflection point in the market. Then any significant fundamental news that comes in, while price is at the inflection point, will give you excellent technical places for putting your stop. Don't miss key shifts in price Holding multiple factors together, across multiple currencies, can be a challenging task for even the most seasoned of analysts and traders. The chances of missing some key data is possible even for them. How much more likely are you to miss key data points and sentiment shifts if you have limited access to the markets. Say, for instance, you are swing trading and accessing your trades around a full-time job. By reading bank trade recommendations you will be alerted to any gaps in your knowledge that you can then follow up. They are interesting It is always a nice curiosity to look at a bank trade. How are they entering, where is their stop? When are they taking profit? In a way the trades can also critique your own view. Maybe you are long NZD/USD, but you read a bank is recommending a short NZD/USD? Well, ultimately this will sharpen your trading process. It is always very satisfying when you can see a recommended trade and you know the reason why there are wrong. Considering different points can be a great help in formulating your own trading plans, as well as stimulating and focusing your own analysis. They can betray a trader's lack of conviction Well, one of the reasons that people will want to follow trade recommendations will be due to the belief that the authority sharing the recommendation is 'well informed'. It is this belief that leads some to trust the authority more than their own decision-making process. Did you favorite respected analyst make a trade call? Perhaps a bank's name that you know are calling for a long on the USD/JPY pair. They have got to be right, haven't they? They are the authority after all. This reason is simply evidence that someone is not ready to be trading. Unsure of their own decisions, they need someone else to give them conviction to trade. So, reasons for not following trade recommendations include an abdication of personal responsibility/conviction. They can be hiding malicious influences Have you heard of pump and dump? This is the well-known market phenomena where people will 'talk up' an asset to simply sell it at a profit. Tell the world that such and such is the next big thing to buy, wait for the price to rise (pump) and then, sell at a profit (dump). The world's hysteria is their profit. It happens a lot.  Some trade recommendations are only opportunistic wolves seeking easy prey. Don't become their victim, avoid the 'secret' or 'must buy' stock you have never heard of.  Even some 'respectable' sources have been known to engage in this behavior. In the currency world this can be a little more transparent for the informed trader since currencies are driven by central banks which publish their monetary policy. It is hard for a bank to claim inside knowledge of a central bank's future policy, and if they do indicate a 'special' or 'unique' knowledge beyond good analysis, then let the buyer beware. This article was submitted by the ADSS research team.  ForexLive

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MARKET WISDOM | EDUCATION FROM BROKERS Wed 13 Mar

Finding forex trading signals services that are very profitable

A look at how to search for something that works for you Some Forex traders dream about finding great set and forget forex trading signal services which are easy to follow, profitable and convenient. They would then just copy the daily currency recommendations into their Forex broker dealing station and watch their trading account grow and grow. A short while ago over 250 online Currency trading alert services were reviewed and alert services like the one described above do exist! The big challenge to the average Forex Trader is firstly, finding forex trading signal services that fit the success mold and then secondly, making sure that the service is credible. This article will address the first question of how to find possible currency trading alert services to consider. ForexLive Trading alert services to consider The technique mostly used by many forex traders is to search the Web using a good search engine and then to slowly search through the results to find say 20 alert services to consider for evaluation. This is a good starting point but remember to use appropriate search terms. For instance, currency trading signals, currency trading alerts and currency alert service bring up different results. This may seem like hard work but always use your trading dreams as a motivator. When on the search engine results pages do not neglect the paid adverts to further increase your chances of finding great currency trading signal services. You can find some unexpected gems by clicking on these. An alternative good place to search for great forex trading signal services are Forex service review sites. Some of these sites give objective and paid reviews of many forex trading signal services on the market and allow users to post comments on their own personal experiences. Some of them list over a 100 forex trading signal services so your job can be reduced considerably. These are likely the best source of good forex trading alert services, as you get direct user feedback as well. We have also found these to be one of the best guides to the creditability of alert services. Use search engines to firstly find the review sites. Most of the review sites offer direct links to alert services providers. Utilizing forex blogs Forex blogs are again a good source of alert service information. Going into discussion forums is a lot more time consuming and your return on effort will be less than the techniques already mentioned. We use this method to check on the credibility of a service rather than finding a service. An often-overlooked method is word of mouth. Use your network of other forex traders to enquire whether they have had any good experiences with forex trading alert services. Using the methods above, alert services producing 27 000 pips a year and returns of between 200% and 1000% on capital used, have been found. Not a bad investment of time and effort but 250 alert services had to be researched to get there. You too can benefit from following the process described in this article and well as the articles to follow. It is well worth the effort. The activities above should provide you with a list of between 20 and 50 Forex trading alert services to consider. How you then water these down to the few that will make you money is the subject of the next article to be published in the article directory. Make sure to watch out for them. This article was submitted by UBCFX.

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WAR STORIES Wed 6 Mar

The S&P 500 bottomed 10 years ago today. Here's what it looked (and felt) like

An up close and personal view Anyone who was trading in 2009 will never forget it. The emotion was intense. Every day was a wild ride. Today marks 10 years since the March 6, 2009 bottom in the S&P 500 at 666. The index is up 4.16x (plus dividends) since then in what has been a remarkable run. What's often forgotten is how wild it was at the bottom. The paid had already been monumental through mid-February and the economic numbers had begun to flatten. Then the bottom fell out. The S&P 500 fell another 25% in just 18 trading days. By comparison, what felt like a brutal selloff in 2018 started in early October and took 58 trading days and only amounted to 20%. Technically, there wasn't a great sign of a bottom. A couple of dojis at best and a bullish candle. Fundamentally there was no big economic release or news item that turned the tide. It was truly a case of buyers simply exhausting themselves and stocks falling to ridiculous valuations. I remember watch CNBC for months afterwards and so many analysts saying the market 'had to go and retest the bottom'. It never did. What's incredible is that by March 20 the index had risen nearly 25% from the lows. Personally, I just decided to look up my old trading statements from that month. I remembered buying stocks right at the lows and my memory was correct. Some of the trades were even better than I thought. I bought the levered ProShares ultra S&P 500 on March 3. Unfortunately I sold it a few weeks late for a 50% gain. Normally that would be a spectacular return but in hindsight, it was the wrong way to go about it. First off, I didn't have much money in 2009 so it's all kind of laughable. An even better trade I made at the bottom was GE. I bought calls on March 4, which was literally the day shares of the company bottomed at 5.50. They were extremely short dated with a March 21 expiration but cost only 37-cents. In any case, on March 21 the shares closed at $9.90 which means they would have risen 6.5x if I'd been wise enough to hold them. Looking back, it doesn't matter that I was right at the bottom. I was far too reckless and going into trades where I couldn't stomach the volatility without doing something stupid (like selling too early). The lesson I've learned many times since, and finally absorbed, is that you need to trade at sizes where you're comfortable. I'm sure at the time, that $1000 seemed like a lot to have on a trade. The volatility of the trades was also extremely high with options and levered ETFs. The lesson is that time is on your side. Some people can handle wild swings and keep a cool head, but it's rare. In general, the best thing you can do is play the long game when things get crazy and usually the only way to do that is to trade small and buy things you're very confident it. ForexLive

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TRADING TECHNIQUES | EDUCATION FROM BROKERS Tue 5 Mar

Why you should be using automated forex signals

Using forex signals to your advantage Unless you are already a full-time trader, or unable to access a computer 24 hours a day, it's difficult to trade forex on a part-time basis. Many forex brokers and independent companies have developed trading systems that offer forex signals telling the user when to buy and sell. Take your trading to the next level The execution of a trade could be as simple as pressing a button or making a telephone call. Unless you are already a full-time trader, or unable to access a computer 24 hours a day, it's difficult to trade forex on a part-time basis. Many forex brokers and independent companies have developed trading systems that offer forex signals telling the user when to buy and sell. The execution of a trade could be as simple as pressing a button or making a telephone call. Forex trading signals usually operate on a mathematical formula and when parameters are met, a signal is sent out via e-mail or phone. Once the signal is received, it's up to the user to decide whether or not to take the signal. There are a lot of mixed reviews on forex signal service providers. To be truthful most signal services work, it's the individual that fails to follow the system. Even though you are not deciding when it's a good time to buy or sell, your emotions can still get in the way if you are coming off of a losing streak.  It is however possible to weed out a lot of the losing signals if you are able to identify the overall trend. Some companies claim to make 20% per month using automated trading systems. I'll be the first to say that these systems do exist; it's just a matter of testing the different trading software's out there to see which ones work and which ones do not. When seeking out a reliable source of forex signals be sure that their data is back tested, and the company has a proven track record.  Most systems will offer a trail period that enables you to test the system before committing to their service completely. Prices for these systems can range anywhere from $15 to $500 per month depending on the quality of the signals. If a novice trader is lucky enough to find a personal forex trader that manages a small group of people and their money this can sometimes be even more profitable then the large forex signal service providers.  However, finding reliable forex traders and trusting them with your funds are hard to come by. There is nothing wrong with using forex signal providers given you do not have time to trade for yourself. However, taking a bit of time to learn how the forex market reacts to news and events will greatly enhance you trading profits.This article was submitted by UBCFX. ForexLive

ECONOMICS | EDUCATION FROM BROKERS Mon 4 Mar

Political crisis in Venezuela and US pressure makes up two pillars in bull oil market

Shedding some light on the influence of the US-Venezuela spat towards oil Apart from currency pairs, retail traders exploit the opportunity to speculate other assets. Crude oil is one of the most popular assets. Petroleum is traded through CFDs or a contract for difference. One CFD means buying or selling 100 barrels of crude oil without actual delivery of a commodity. Trading crude oil is available at particular hours. For instance, North Sea Brent Crude is traded from 01:00 am on Sunday GMT+00 until 10:00 pm. The oil market is closed overnight from 11:00 pm until 01:00 am. Oil deals cannot be executed at this interval. Oil CFDs are valid over a particular term. When contracts expire, deals are closed at current market quotes. To profit from trading oil with CFDs, you should grasp the principles of how and why oil prices fluctuate. To begin with, crude oil is the basic commodity for the energy industry. Thus, it is bought by virtually all countries. The bulk of oil production comes from the US. So, oil invoices are settled in US dollars worldwide. Therefore, crude oil and the US dollar are closely linked. If you want to predict a dynamic of oil prices, it would be a good idea to monitor fluctuations of the US currency. Make sure you take notice of all factors which matter a lot to the greenback such as policy meetings of the Federal Reserve, employment data, GDP rates etc. On the contrary, if oil prices develop a rally or lose ground for reasons other than macroeconomic data, this is also mirrored in the dollar's value, thus changing trajectory of many currency pairs. Besides, petroleum is highly sensitive to social and political causes in the world, especially in oil exporting countries. For example, when the US imposed sanctions on Iran due to its nuclear program, the global oil market responded with a rally because of a tighter supply. Regular military clashes in the Middle East also trigger price fluctuations and even sharp price swings.                       In 2019, political jitters in Venezuela have been a major catalyst for twists in global oil prices. Indeed, this OPEC member holds the largest developed oilfields on Earth. In January 2019, the opposition declared their leader Juan Guaido interim Venezuela's president despite the fact that incumbent president Nicolas Maduro had not stepped down yet. Some countries, in particular the US, have already welcomed the new self-proclaimed president. By contrast, Russia and China are backing the legitimate Venezuelan president. The thing in this saga that arouses keen interest among energy investors is how crude oil responds to developments in the upper echelons of power in the Latin American country. ForexLive The US has already slapped various sanctions on Nicolas Maduro and his hardliners, meanwhile avoiding restrictions on the whole oil sector of Venezuela. The situation could change anytime soon. US President Donald Trump warned that he is ready to impose new sanctions on the back of growing clashes over Maduro's autocratic rule. Oil output in Venezuela used to be 3.4 mln barrels per day during the economic boom but it was slashed to less than 1.2 mln barrels in 2018. Venezuela is the third major supplier to the US in terms of oil shipments volumes. Bigger oil exports come from Canada and Saudi Arabia. Nearly half of the current oil output in Venezuela is exported to US oil refineries. One of them, Citgo, is owned by PdVSA, the Venezuelan state-run oil and gas company. Venezuelan heavy acid crude oil has to be mixed with other grades for further processing. If the whole Venezuelan energy sector is subject to sanctions, prices of heavy crude grades will surge instantly. Prices of similar crude grades have already soared by 6.25%.                                         Canada extracts equivalent crude grades from oil sands in the province of Alberta. However, US oil refineries which are mainly located along the coast of the Mexican Gulf will encounter troubles with such oil supplies due to the frail logistics infrastructure throughout Canada. Channeling oil from the Persian Gulf region is also a tricky solution as it takes too much time. In essence, in case the Venezuelan oil sector is targeted by sanctions, US refineries at the Mexican Gulf coast which process the Venezuelan petroleum will have to deal with higher production costs. If they have to reduce their production capacity, this could inflate petrol prices in some regions.               If the US announces fresh sanctions on Venezuelan oil companies, there is a likelihood that the LatAm country will also halt purchases of American petroleum products even if this decision causes more damage to Venezuela than the US. According to the US Energy Information Administration, Venezuela imported over 3 million barrels of refined oil from the US in October 2018. At present, domestic refineries are not able to produce enough petrol and other petroleum products to satisfy local demand. Since 2016, Venezuela has been importing petrochemicals which are blended with heavy domestic grades for further exports. If the trade with the US is terminated completely, Venezuela's oil exports could decline to a large degree until the LatAm country discovers a different source of lowering oil viscosity.                     As a rule, Venezuela's public budget is mainly replenished by revenue from its crude exports to the US. Revenue from other oil exports is allocated for repaying loans borrowed from lenders, including Russia and China. If Venezuela fails to fulfill its commitments to Russia's Rosneft, this oil company will be able to claim the right to PdVSA's stake in the US. In fact, PdVSA's debt to Rosneft is secured by a 49.9% stake in the Citgo oil refinery.                      The US government is likely to ban a Citgo acquisition deal by Rosneft, citing national security. This scenario could spark a standoff among Venezuela, Russia, and the US. If PdVSA defaults on its debt and the US Department of Justice freezes the Citgo's stake for Rosneft, the logical development is that the equities will be sold at a discount to a company agreed by the parties.Obviously, the sanctions will deal a serious blow to Venezuela. Besides, the sanctions will also exert an immediate adverse effect on the US. Nowadays, US storage facilities have been filled up with petroleum products. US refineries are running at full capacity, thus amassing huge stockpiles. Meanwhile, Mexico has halted oil imports from the US as the government launched a crackdown on fuel theft from pipelines. In case Venezuela retaliates against the American sanctions by halting US oil imports, we will see US oil inventories swelling. Most analysts reckon that oil output in Venezuela could contract to 1 mln barrels per day in 2019. The worst-case scenario suggests even bigger production cuts. Experts foresee a surge in oil prices in May. A variety of factors could dwarf supply in the global oil market this spring: sanctions against Venezuela, the beginning of vacation car journeys in the US, expiry of waivers granted to major buyers of Iranian oil, and the ongoing pact on oil production cuts by OPEC and its allies.                To sum it up, with any developments in Venezuela, including the scenario of Nicolas Maduro asserting his power, the US will step up its pressure on the Latin American country which will have to curb its drilling activity and petroleum exports to the global market. There are weighty reasons to expect a rapid rally of oil prices in the first half of 2019. Therefore, crude oil is likely to be a lucrative and above all liquid investment asset that will make an impact on Forex. Importantly, a steady oil rally will be certainly bullish for commodity currencies that will support domestic economies of the countries assigned to emerging markets.  This article was submitted by InstaForex.

TRADING PSYCHOLOGY | EDUCATION FROM BROKERS Wed 27 Feb

Trading techniques that can work for you

A look at the simpler things you can do to help your trading Trading like anything else is about practice, reps, routine, and goals. Without any or all of these things it is difficult to be successful in your trading. Complicating this process slightly is the influence of other factors as well, namely emotions, a desire to make profit, and expectations. For these reasons, it's important not to get too caught up with any one specific goal or expectation, as this is when mistakes and losses can happen. When trading with an effective balance, emotions such as fear, ego, greed and revenge trading are practically non-existent. Only then can you manage to be the best trader you can be and achieve a level of success you are likely looking to pursue. Take your trading to the next level ForexLive The bitterness of reality Unfortunately, axioms and motivational speeches can only get you so far. Once your money is on the line, even an individual who has had months' worth of consistent returns could easily choke or experience losses when they go live. So how can you practice to become perfect? Keep calm and trade Not all markets are created equally and some are certainly more volatile than others. For example, classic markets such as oil, exotic currencies, and cryptos are all classified as highly volatile. While the term carries a negative connotation, volatility can actually benefit experienced traders and some strategies. For example, without any volatility, there would be little chance of making any profits at all, the challenge is finding an acceptable level of this force. By extension, there is a lot that can be gained by simply trading on less active markets. Rather than being priced into big decisions, you can instead gain a valuable chance to analyze and act without the pressure of constantly fluctuating price movements. Furthermore, another benefit of trading across more subdued markets is that that less volatile markets tend to move less, so if you are the wrong side of a trade, you stand to lose less than if you were trading on a volatile market. Learn from your mistakes Everybody makes mistakes, that's why they put erasers on pencils. In the world of trading, mistakes - or more specifically losses - reflect a valuable opportunity for growth and learning. This is why such setbacks are important for growing as a trader. A good practice is also to keep a trading journal, complete with a log of all the reasons that lead you to opening a certain position. This can include the fundamental or technical data that informed that trade. Understanding your thought process in any given time is the best way to make sure that correct and informed decision-making was rewarded and a lack thereof was met with losses. Traders that have routinely found success have managed to find the winning formula through trial and error so it's ok to make mistakes. Experience through setbacks Being mentally tough comes from experiencing losses. A trader who has never known adversity is unlikely to even know their own limits. Rather, most of the negative emotions that traders experience is associated with losing. Ultimately, experience will teach most traders that losing is part of the game. To stay viable and sustain your account, you must look at the big picture and not focus on individual losing trades. You can still be successful even after incurring losses so long as you learn from them and improve. Do not let even the smallest setback deter you from learning as each instance of success or failure is a valuable opportunity for growth. A break from the monotony Many traders like to approach their craft full throttle but it's also important to space in breaks periodically. It is completely reasonable to become burnt out en route to grinding out gains, and thus it's crucial to understand your own limits and need for a respite. Much like other professions, the advent of recuperation and recovery is a time and tested strategy to ultimately improve and condition yourself. Trading is no different and if you are fatigued, winded, or tired, then your body is telling you it's time for a break. Some professional traders say that after three consecutive losses or wins they will stop for a moment and take a walk. This can help take you separate yourself from any trade emotionally and avoid any level of impulsiveness that can lead to even greater losses. - This article was submitted by UBCFX

TECHNICAL ANALYSIS Mon 25 Feb

USDJPY stuck in the mud. When will it break free? The price action will tell us.

Last week's range was the lowest since January 2012 The USDJPY is stuck in the mud. Last week, the range for the pair was only 52-53 pips wide. That was the most narrow trading week since January 2012. Its is 2019 now, so that makes it a 7+ year record.  That's a long time and says the market is non-trending. Non-trending leads to trending (it is either one or the other)   Looking at the hourly chart, the 110.55 to 110.94 is the "Red Box" that has confined the range over the last 3+ days.  The low is above the low from last week which was down at 110.42.   We currently trade at 110.83.  If the price is to extend one way or the other, getting out of the "Red Box" is what traders will look for. The next thing they will look for is staying out of the "box" and showing momentum.   Absent that, and we remain in the mud. I know that is somewhat obvious, but we as traders, need to recognize what is happening and then anticipate what might happen next.    What I know is the price action tends not to sit in a 52 pip range for too long (or more recently a 40 pip range). At some point, there will be a shove that breaks the market higher or lower (PS. the price is doing nothing because "the market" does not know what to do next...yet). Is there any other levels to eye other than the extremes? The 100 and 200 hour MA (blue and green lines at 110.724 and 110. 683) tends to see the price action move above and below in non-trending markets. However, it still defines the bias. Trade above is more bullish. Move below is more bearish.  Today, the price last tried to trade below,but that move failed near the 3 day lows.  However,  note what happened on the move back higher.  The price used the 200 hour MA (green line) as support and has moved higher over the last 3 hours or so.   The buyers are making a play. They are more in control. Can they push above and outside the "Red Box"?  No one really knows (it might fail in which case buyer turn to sellers), but traders can anticipate the future from the wiggles and waggles from the intraday technical clues and hope that the bigger shove is just around the corner. ForexLive

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TECHNICAL ANALYSIS | EDUCATION FROM BROKERS Mon 25 Feb

The famous classical technical chart patterns

A look into the more familiar patterns on the chart This article was submitted by ICM.com. Technical analysis is a type of analysis which is applied by traders on different financial assets, where they study the past price performance of a certain financial asset to forecast the future price direction or trend of this asset. There are numerous ways of analyzing the markets via technical analysis. Some traders might use technical indicators and oscillators, while others prefer to use the price action itself. According to the Dow Theory, the market discounts everything. In other words, the price of a certain financial asset discount all the past, current, and even future economic releases, events, etc. So by studying the price action of a certain financial product, traders will be searching for repeated price patterns which could assist them in determining the future direction of the market. In this article, we will cover the classical chart patterns which are to split into two categories: trend continuation patterns and trend reversal patterns. Continuation Patterns They are considered as a pause in the prevailing trend which implies that during an uptrend, the bulls are preparing for another push higher whereas during a downtrend, the bears are preparing for another push lower. These patterns should be drawn properly by traders and they should be very patient while trading the breakout of such patterns to avoid being trapped in false breakouts. Usually, when these patterns take more time to form, they will be followed by significant price movements. Triangles fall under the category of continuation patterns and are of three types: symmetrical, ascending, and descending. A symmetrical triangle is formed of higher lows and lower highs which usually signals that the market is balanced and ready to move either way. As the triangle is being formed, the volume shrinks, and the breakout would be accompanied with great volume which leads the market to the next move. An ascending triangle is usually considered as a bullish pattern which forms in an existing uptrend. It consists of a horizontal line combining the highs or resistance points, and a line combining a series of higher lows. Despite the fact that the breakout could occur to either direction, traders usually await a break to the upside as the triangle is a continuation pattern which means that the market had a slight consolidation to prepare for an upcoming price move within the same direction of the prevailing trend. A descending triangle is considered as a bearish structure which forms in an existing downtrend. It consists of a horizontal line combining the lows or support level and a line combining a series of lower highs. Traders will be waiting for a break to the downside as they believe that the market took a pause from the prevailing trend and the trend will resume when we breakout from this consolidation pattern. Reversal Patterns Reversal patterns are patterns that occur at the end of a prevailing trend to give a signal to the trader that there could be a possibility of a change in direction. In other words, these patterns will help us indicate that the current price movement has topped or bottomed. If a trader was holding buy positions in an uptrend, and he detected the formation of a possible reversal pattern, then he should be thinking of liquidating his position and re-assess his bias. Among the most recognized classical reversal patterns are the head and shoulders formations, the double top & bottom, and the triple top & bottom. Head and Shoulders patterns consist of three peaks with the middle peak being the highest, the left and right peaks holding similar or close price levels. The volume will be the largest in the first shoulder and starts to decrease until we break out from this formation. A Head and Shoulders pattern will appear at the top of an uptrend, while an inverted head and shoulders pattern will form at the bottom of a downtrend. Double/Triple tops and bottoms are among the most reliable reversal chart patterns and can be found easily on charts. Usually, they are formed when the price of a financial asset retests a resistance or support zone without being able to break above or below respectively. Some traders add technical oscillators such as the Relative Strength Index and search for divergence to confirm their trading setup. If we go over charts of different time frames or even range charts, we will be able to find a classical chart pattern, whether from the mentioned above or the rest. However, it is always better to adopt the formations that occur on higher time frames taking into consideration the length, uniformity, and clarity. Traders should always be cautious about being stuck in a false breakout. In order to avoid such entries, a trader should make sure that the breakout is occurring with heavy volume, or ignore the initial breakout and wait for a retest to the neckline/support/resistance and jump into a trade. Chart patterns will help you pick your trades. Many traders wait for such formations to trade which would lower their number of trades and also reduce the percentage of losing trades. Despite the theory that price discounts everything, it is better to always apply fundamental analysis along with technical analysis. When a technical trading setup matches the fundamental analysis findings, the trade would have a higher chance of success. Finally, we advise all traders to stick to strict risk management techniques as risk management is the key to successful trading. ForexLive

TECHNICAL ANALYSIS Sat 23 Feb

No man is an island....especially if you want to be a successful trader

Lean on other traders and technical levels to increase your success as a trader No man is an island...especially if you want to be a successful trader.  When I get up in the morning, turn on my computer and load my charts, the first things that come to my mind when looking at that chart is Where am I going to lean and Where are most of my friends going to be hanging out.  You see, you need to lean on "the market"...that is the collection of successful traders who lean against technical levels   There is no room for you to be on your own island.   If you like the video, please be sure to give a thumbs up and put a comment as well on YouTube.   Have a great weekend..... ForexLive

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