Trading and Investing in the Forex Markets Using Chart Techniques

1 Candlesticks = Signals 1

Introduction 1

Japanese Candlestick Signals 3

The Single Signals 7

Japanese Candlesticks – Double Candle Signals 32

Some Candlestick Examples 47

Some Further Candlestick Examples 47

Chart Analysis Exercise 1 49

Chart Analysis Exercise 1 – Answers 50

Summary 50

2 Chart Patterns = Opportunity 53

Continuation Patterns 54

Reversal Patterns 54

Bull Flags 54

Bear Flags 54

Bull Pennant 57

Bear Pennant 57

Bull Symmetrical Triangle 57

Bear Symmetrical Triangle 57

Bull Falling Wedge 63

Bear Rising Wedge 65

Inverted Head and Shoulders Continuation 66

Part Two – Reversal Patterns 67

Bullish Head and Shoulders Reversal Pattern 67

Bearish Head and Shoulders Reversal Pattern 69

Triple Top Pattern 69

Triple Bottom Pattern 69

The Double Top Pattern 72

The Double Bottom Pattern 72

The Bullish and Bearish “V” Pattern 72

Bullish “V” Top 77

Bearish “V” Bottom 77

The Broadening Top and Bottom 77

Some Chart Pattern Examples 81

Chart Analysis Exercise 2 82

Chart Analysis Exercise 2 – Answers 83

Summary 83

3 Buying and Selling = Support and Resistance Levels 85

Support and Resistance 86

Trend Lines 90

Trend Line Channels 90

Intermediate Trend Lines 95

Internal Trend Lines 96

Pivot Lines 96

Predetermined Pivot Highs and Lows 104

Calculated Pivot Lines 109

Fibonacci Levels 110

Chart Analysis Exercise 3 120

Chart Analysis Exercise 3 – Answers 121

Chart Analysis Exercise 4 122

Chart Analysis Exercise 4 – Answers 123

Summary 123

4 Applying Confirmation = Confidence Building 125

Simple Moving Average (SMA) 125

Simple Moving Average Channel 132

Chart Analysis Exercise 5 137

Chart Analysis Exercise 5 – Answers 138

Momentum Oscillators 139

The RSI Oscillator 140

The Stochastic Oscillator (Slow) 141

The MACD Oscillator 146

Chart Analysis Exercise 6 152

Chart Analysis Exercise 6 – Answers 153

Chart Analysis Exercise 6 – Answers (Continued) 154

Chart Analysis Exercise 7 155

Chart Analysis Exercise 7 – Answers 157

Summary 158

Entry and Exit = Right or Wrong? 161

Climax Volume 162

Pivot Lines as Entry and Exit 165

High/Low/Close and High/Low Calculated Pivot Lines 170

Candlesticks on Short-Term Charts 172

Patterns on Short-Term Charts 174

Summary 175

6 Putting it all together = Practice and Patience 179

Finding the Technical Picture 180

Creating the Watch List 190

Money Management 193

Summary 194

A Word on Filters 194

A Word on Recommendations 195

Final Word 196