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Classification of trendsIn an earlier note, we defined a trend as a period in which price moves in an irregular but persistent direction. It could also be a time measurement of the direction in price levels. The three common classifications of trends are: primary, intermediate and short-term trends. Primary trends: This trend revolves around the business cycle which lasts for 3.6 years from one bottom to the next bottom or from one top to the next top. Bull and bear trends respectively last for 1 to 2 years, though the magnitude and duration may be significantly different at various times. Reversal price patterns in primary trends usually take longer than three months to complete. You can find primary trends on the higher time frames like the monthly time frame. This is a EURUSD chart on the monthly time frame of a bull trend illustrating how long a primary trend on the bull side or bear side can last. Intermediate trends: When primary uptrends and downtrends are interrupted by countercyclical corrections along the way, they give rise to intermediate trends. These last from 6 weeks to 9 months, and could last even longer, or could even be shorter than 6 weeks in some occasions. Reversal price patterns in intermediate trends could take from 3 to 6 weeks to form and its duration depends on the duration and magnitude of the intermediate trend preceding it. Intermediate trends are usually found on the weekly time frame. Short-term trends: These trends are countercyclical corrections in intermediate trends, and sometimes they align with the intermediate trend. They typically last 3 to 4 weeks and could sometimes be shorter or longer. They are usually influenced by random news events and could be difficult to identify. Price patterns in short-term trends can take 1 to 2 weeks to develop. These trends can be spotted on the weekly, daily, and 4 hours time frames. Below is a EURUSD chart showing countercyclical trends on the daily when compared to the intermediate trend, the weekly, which was in a downtrend. Next we will discuss how understanding trends and their categories has consequences on understanding how price patterns will probably turn out.
Education
by Emekadavid
Time frames in trading price patternsBecause human psychology is more or less constant, that means the principles of technical analysis can be applied to any time frame be it 5 minutes to daily or monthly time frames. The only difference between time frames is that the battle between buyers and sellers is much larger and pronounced on the higher time frames than on the intraday time frames. Therefore, in generalizing, trend reversal signals are more significant on the longer time frames. When trading price patterns, any time frame can be used. What matters most is the character of the pattern. This is a pin bar that was profitable on the 15 min time frame of AUDNZD. I prefer to take trades on the longer time frames like the daily, 12 hours, 8 hours, 6 hours, and 4 hours time frames. I noticed that they contain less noise from the market and suits my temperament. You can choose yours. Notice how smooth this inside bar is on the 4 hours time frame of GBPJPY chart. Compare the same signal on the 5 min chart. You can see that on the 5 min chart you have to deal with a whole lot more bars and you have to spend lots of time on the screen when you can get the same pips spending lesser time on the 4 hours timeframe. That doesn't mean lesser time frames are inferior. Each person has to choose what suits his personality and is convenient.
Education
by Emekadavid
The psychology of price patternsWe have said before that changing attitudes determine price and price moves in trends that tend to perpetuate. So, how can a trend be defined? Simply, it is the movement of price in an irregular but persistent direction. When you zoom out your chart and watch price movement, whatever is obvious is the trend. The USDZAR chart below illustrates some trends you will encounter. For those that are familiar with watching charts, then we can say price moves in either of 3 ways: upwards, downwards, or sideways. When it is moving upwards or downwards, people say either the buyers are greater than the sellers, or the sellers are greater than the buyers. But thinking this way has errors. They are saying that the market is not in equilibrium. The correct interpretation of such upwards or downwards movement is that the buyers are either more aggressive or enthusiastic than sellers for uptrends, or the sellers are more aggressive or enthusiastic than buyers for downtrends. For the third case, the sideways movement, we can say that this is a transitional period, a period where the aggression of buyers and sellers are evenly matched. It is at these periods that price patterns develop. This is a period of consolidation between both sides of the market and it is of two types: a. Consolidation or continuation patterns: this is where the preceding trend before the consolidation is seen continues after the consolidation. That is uptrend to consolidation to uptrend vice versa. The chart below shows an example. b. Reversal pattern: this is where the opposing trend to the preceding trend before the consolidation is achieved. This pattern separates an uptrend from a downtrend, and a downtrend from an uptrend. These patterns are the bread and butter of the setups we trade in price action. These patterns sometimes don’t work in line with the fundamental news such that they might appear unbelievable. That is what makes them powerful. I have seen so many traders who saw a reversal pattern in an asset but who read that the fundamental news says the trend will continue. Because they chose to follow the crowd, rather than listen to price, they placed a trade in line with the fundamental news only to lose money in the process. This is why in my trading I don’t follow the fundamental news or what the crowd is saying. I listen to the crowd but don’t follow them. I follow price and the patterns that price gives. This is because every news in the market is already factored in the price. Therefore, it is better to follow price.
Education
by Emekadavid
EURUSD short Update - Supply Demand - h4Hello Traders! The last analysis was great. EURUSD dropped a lot. You can see on the charts. I adapt it for you and we can see how exactly EURUSD respected all Supply Zones. It dropped, then it went back up to grab more liquidity and again drop. Very beautiful. Here you can really see how nice Supply and Demand works. Now we have some new levels on the chart and also a Swap Zone. Swap Zones are not considered as strong as a fresh Supply or Demand Zone but you should still keep an eye on them. This is why I marked two possible scenarios on the charts. What can we expect: A retracement on EURUSD and afterwards a great drop from one of the two zones. On the long run we could see it dropping more but we will see. It is not clear yet. But I also marked for you a daily Demand Zone. That was my Idea and I hope you liked it. Please leave a LIKE if you like the content. In the comment section you can share your view and ask questions. Thank you and we will see next time - Darius.
Short
by DariusFxTrading
2
Technical analysis definedTechnical analysis has been defined as the art of identifying a trend reversal at a relatively early stage and riding on that trend until the weight of evidence shows or proves that the trend has reversed. This definition has influenced my choice of strategies and why I chose price patterns to trade the forex market. Here is how I do it according to the definition above: a. The art of identifying a trend reversal: I use trendline breaks to do this. I used to rely on swing points. For uptrends, I would be waiting for when the last swing low is broken, and for downtrends, when the last swing high is breached. But now, I use the break of trendlines. On the GBPUSD daily chart, you could see how the trendline break and using the 123 pattern could help one to identify and enter the trend early. b. Riding on the trend: I use trailing stops to ride a trend when I have hopped into the trend so as to lock in my profits before the trend reverses. I place the trailing stop at logical levels in the price movement. For downtrends, at swing highs and for uptrends, at swing lows, because if price comes back to this levels, the trend has reversed. c. Until weight of evidence proves price has reversed: I would ride a trend until the trendline gets broken or I get stopped when price hits the trailing stop loss. The two charts below contrasts and compares the use of trailing stops and trendlines to ride the trend and exit when trend has reversed. The first, using trailing stops, would give you a net pip profit of 5393.8 pips. The second, using a trendline, would have given you better profits. The choice is yours. Both methods are good. As I said in another article, I don’t trade price action in isolation. I look for other signs like momentum, volatility, and the story the price action tells before deciding on a course to take. Some traders trading forex would use volumes which I have considered in the past, but I think that volumes are unreliable because the forex market is decentralized and different forex brokers would give different output for volumes. Just my POV though.
Education
by Emekadavid
USDCAD both directions, let's get paid.Hello ladies & gentleman, I wanted to show my perspective on USDCAD As I Illustrate in this video, I'm expecting USDCAD to breakout of this next level and retest it, to take a trade all the way up to the next level that confluences to the trendline. Whenever price get to that area I'd like to see some good impulsive movement to the down side, expecting a bearish flag, flat flag, whatever continuation pattern comes up first, to take a trade and capitalize all the way down. I'd like to see / know what you guys are expecting from this pair, any commentary will be well received. Hope you enjoyed the idea!.
Long
by olmedomanuel_
1
AUDNZD possible shortHello ladies & gentleman, I wanted to show my perspective on AUDNZD With what price has showed us so far, I'm expecting price to continue with the bearish pressure. As I showed you guys on the video, I'm waiting for price to just breakout, retest, and start to create bearish impulses. Target is small since I am expecting price too to give us a bigger continuation pattern to continue to go lower. In case such thing does not happen, then every structural level that price breaks down and retest, could be a pretty good opportunity to scale in. The 2nd scenario that I illustrated on the charts could take a couple of more weeks, where we could be able to capitalize on small trades inside of the bigger correction, but for now, short is what I am going to be trading. Expecting Stop losses of 10 to 15 pips as maximum, and looking for 1:3 Risk Reward Ratio! Hope you liked the idea! Leave any comments!.
Short
by olmedomanuel_