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Harmonic Patterns

Harnessing Harmonics Part 2: Multi-Timeframe Analysis Welcome back to the second part of our Harmonics series. In this segment, we'll delve deeper into the world of harmonic trading by exploring the power of Multi-Timeframe Analysis. Understanding how different timeframes align and interact can significantly enhance the precision of harmonic trading strategies. Understanding Multi-Timeframe Analysis We mentioned in Part 1 that derivations of the ‘impulse – retracement- impulse’ ABCD pattern repeat itself across all timeframes. The reason for this is that price is ‘fractal in nature’. A fractal is a type of pattern where the parts resemble to whole, think snowflake or broccoli head, they look like they’re constructed of smaller versions of themselves, and this happens with price. Those big cycles that take months to complete are replicated in a min-version on lower timeframes every day. Hence, multi-timeframe analysis is simply looking at the same market across multiple timeframes. Fractal Nature of Price Action Past performance is not a reliable indicator of future results Why Multi-Timeframe Analysis Matters: Harmonic patterns gain strength and reliability when they align across multiple timeframes. This synergy reinforces the potential effectiveness of trade setups and aids in filtering out weaker opportunities. Confirmation of Patterns: Identifying a harmonic pattern on one timeframe is good, but when it aligns with the same pattern or trend on higher timeframes, it amplifies the signal's strength. Enhanced Precision: Pinpointing entries and exits becomes more precise when a harmonic pattern on a lower timeframe corresponds with significant support or resistance levels on higher timeframes. Reduced Noise: Filtering out noise and false signals becomes more achievable when harmonic patterns across different timeframes confirm each other. Practical Application of Multi-Timeframe Analysis 1. Higher Timeframe Confirmation: When spotting a harmonic pattern on a lower timeframe, look for confirmation or validation from higher timeframes. 2. Entry and Exit Precision: Use the higher timeframe for identifying major support or resistance levels that align with the completion of a harmonic pattern on a lower timeframe. This can be pivotal in defining precise entry and exit points for trades. 3. Managing Risk: Higher timeframes can offer a broader perspective on the market's direction. If a lower timeframe shows a bullish pattern but the higher timeframe indicates a bearish trend, it could signal a higher risk environment, prompting a more cautious approach or tighter risk management. Example Scenarios: 1. Multi-Timeframe Confirmation Hourly ABCD Completion – Daily Trend Confirmation In this example scenario, EUR/USD has completed a harmonic ABCD move higher on the hourly candle chart. Viewing this pattern on the daily timeframe reveals that the dominant trend is firmly bearish – adding significant weight to the hourly pattern. EUR/USD 1hr/Daily Timeframes Past performance is not a reliable indicator of future results 4hr Cypher Pattern – Daily Trend Confirmation Consider a Cypher pattern forming on the 4-hour chart of GBP/USD. Validating this pattern with the daily candle chart reveals confluence with the dominant trend, strengthening the trade setup. GBP/USD 4hr/Daily Timeframes Past performance is not a reliable indicator of future results 2. Support/Resistance Alignment Daily ABCD Completion – Weekly Resistance Spotting an ABCD harmonic completion pattern on the daily chart of Gold, the alignment with multiple resistance levels on the weekly timeframe adds significant weight daily candle pattern. Gold Daily/Weekly Timeframes Past performance is not a reliable indicator of future results 3. Conflicting Timeframes 1hr Bullish Gartley Pattern – Conflicting Daily Trend Identifying a bullish Gartley pattern on the 1hr candle chart of GBP/USD but noticing a conflicting trend on the daily chart could signal higher risk, requiring a more cautious approach or potentially avoiding the trade. GBP/USD 1hr/Daily Timeframes Past performance is not a reliable indicator of future results Conclusion Integrating Multi-Timeframe Analysis into harmonic trading strategies enhances precision, validation, and risk management. Harmonic patterns validated across multiple timeframes provide a more comprehensive and robust framework for making informed trading decisions. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Education
by Capitalcom
Harnessing Harmonics Part 1: The Measured MoveWelcome to this two-part series on Harmonics! In this first instalment, we'll delve into the foundational concept of the Measured Move using the ABCD pattern. Understanding this essential structure lays the groundwork for precise trading decisions based on harmonic principles. Introducing the ABCD Pattern Price action in any market and on all timeframes tends to move from periods of imbalance in supply and demand to periods of equilibrium. This ebb and flow of price discovery is reflected in the ABCD price pattern – a foundational pattern in harmonics which is an area of technical analysis that seeks to utilise the current volatility of a market to predict turning points. The ABCD pattern illustrates the ‘impulse, retracement, impulse’ nature of trending price action, it consists of three legs: AB: The initial leg of the move BC: A corrective phase following AB CD: The leg that mirrors AB in direction approx. magnitude Harmonic ABCD Pattern: Past performance is not a reliable indicator of future results What is a Measured Move? The core principle behind the ABCD pattern is that the best approximation of the next phase of directional price movement is the magnitude of the last phase of directional price action. In other words, the best predictor of CD is AB. A Measured Move is generated by identifying when an AB leg has formed and transposing this AB leg onto the corrective phase at BC. Understanding the Measured Move within the ABCD pattern serves as a cornerstone for traders seeking to employ harmonic analysis techniques to anticipate market movements with precision. Measured Move Approximations: Past performance is not a reliable indicator of future results How to Use the Measured Move: The Measured Move is a simple concept but can be very powerful when harnessed correctly. In a world in which the vast majority of technical indicators are lagging in nature, the Measured Move is a forward-looking indicator that is calibrated the volatility of each individual market. Here are the two cleanest ways to utilise Measured Moves in your trading: 1. Dynamic Profit Target: Utilise the Measured Move as a dynamic profit target mechanism. Once the initial trend (AB leg) is established, projecting the potential length of the subsequent move (CD leg) provides a quantifiable target for profit-taking. This aids traders in securing gains while the trend continues its momentum. Benefits: Offers a clear and predefined target for profit-taking, aiding in trade management. Can help traders to focus on the trade setups with the most attractive levels of risk-to-reward. Additional Tips and Tricks: Confirm the Measured Move target with other technical indicators or patterns for stronger validation. Adjust trade size and risk exposure according to the projected target to optimise risk management. Measured Move Profit Target Example: In the following example, EUR/USD puts in a clear directional move lower which breaks support – forming an AB leg. The market then undergoes a choppy period of retracement – forming our BC leg. A trend continuation trade setup in which EUR/USD is shorted can then be initiated and a profit target can be generated using a Measured Move (CD) which is generated by transposing AB onto BC. Part 1: EUR/USD Daily Candle Chart Past performance is not a reliable indicator of future results Play if forward (see part 2 below) and we can see that the market comfortably hits the harmonic measured move target and forms a short-term bottom around the harmonic target zone. Part 2: EUR/USD Daily Candle Chart Past performance is not a reliable indicator of future results 2. Reversal Zone: The Measured Move can be used to identify areas where price action may stall or reverse direction. When the CD leg completes near the projected Measured Move level, it serves as a signal for potential trend reversal, providing an opportunity to enter trades in the opposite direction. Benefits: Pinpoints potential reversal points, allowing for strategic entry into new trends. Provides an early indication of trend exhaustion or change in direction. Additional Tips and Tricks: Combine the Measured Move analysis with horizontal levels of support and resistance. Combine with reversal candlestick patterns. Example 1: FTSE Completes Measured Move into Resistance In the following example, the FTSE completes a harmonic Measured Move into a clear area of horizontal resistance. Notice how a series of reversal candles form near the harmonic completion zone. FTSE 100 Daily Candle Chart Past performance is not a reliable indicator of future results Example 2: Gold Completes Measured Move into Resistance Here’s a recent example of a harmonic Measured Move completion in the gold market. Notice how this completion occurs at a key level of resistance and a large bearish engulfing candle forms upon completion. Gold Daily Candle Chart Past performance is not a reliable indicator of future results Summary: By integrating the Measured Move technique into your trading strategy, you gain a structured approach to both profit-taking on trend continuations and identifying potential reversal areas. This methodical application of harmonic principles aids in enhancing trade precision and confidence. In Part 2 we'll explore advanced harmonic concepts building upon this foundation. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Education
by Capitalcom
2
AB ⚡️ CD — Harmonic Patterns 🟣The AB⚡️CD pattern is a highly effective tool utilized in trading to identify potential opportunities across diverse markets, including forex, stocks, cryptocurrencies, and futures. 💜 If you appreciate our guides, support us with boost button 💜 This pattern takes the form of a visual and geometric arrangement, characterized by three consecutive price swings or trends. When observed on a price chart, the ABCD pattern exhibits a striking resemblance to a lightning bolt ⚡️ or a distinctive zig-zag pattern. Importance of the ABCD Pattern The significance of the ABCD pattern lies in its ability to identify trading opportunities across different markets, timeframes, and market conditions. Whether the market is bullish, bearish, or range-bound, the ABCD pattern remains a reliable tool. By recognizing the completion of the pattern at point D, you can get a perspective trade entries. Furthermore, the ABCD pattern helps you determine the risk-to-reward ratio before initiating a trade. When multiple patterns converge within the same timeframe or across different timeframes, it strengthens the trade signal and increases the likelihood of a profitable outcome. Finding an ABCD Pattern The ABCD pattern has both a bullish and bearish version. Bullish patterns indicate higher probability opportunities to buy or go long, while bearish patterns suggest opportunities to sell or go short. To identify an ABCD pattern, it is essential to locate significant highs or lows on a price chart, represented by points A, B, C, and D. These points define the three consecutive price swings or legs of the pattern: the AB leg, the BC leg, and the CD leg. Trading is not an exact science, so traders often employ Fibonacci ratios to determine the relationship between the AB and CD legs in terms of both time and price. This approximation assists in locating the potential completion of the ABCD pattern. When patterns converge, it increases the probability of successful trades and enables you to make more accurate decisions regarding entries and exits. Types of ABCD Patterns There are three types of ABCD patterns, each having both a bullish and bearish version. To validate an ABCD pattern, specific criteria and characteristics must be met. Here are the characteristics of the bullish and bearish ABCD patterns: 📈 Bullish ABCD Pattern Characteristics (buy at point D): To effectively trade the bullish ABCD pattern, you might consider the following characteristics: 1. Find AB: Identify point A as a significant high and point B as a significant low. During the move from A to B, ensure that there are no highs above point A and no lows below point B. 2. After AB, then find BC: Point C should be lower than point A. In the move from B up to C, there should be no lows below point B and no highs above point C. Ideally, point C will be around 61.8% or 78.6% of the length of AB. However, in strongly trending markets, BC may only be 38.2% or 50% of AB. 3. After BC, then draw CD: Point D, which marks the completion of the pattern, must be lower than point B, indicating that the market has successfully achieved a new low. During the move from C down to D, there should be no highs above point C. 4.1 Determine where D may complete (price): To determine the price level at which point D may complete, Fibonacci and ABCD tools can be utilized. CD may equal AB in price, or it may be 127.2% or 161.8% of AB in price. Alternatively, CD can be 127.2% or 161.8% of BC in price. 4.2 Determine when point D may complete (time) for additional confirmation: For additional confirmation, you can analyze the time aspect of the pattern. CD may equal AB in time, or it may be around 61.8% or 78.6% of the time it took for AB to form. Additionally, CD can be 127.2% or 161.8% of the time it took for AB to form. 5. Look for Fibonacci, pattern, trend convergence: Convergence of Fibonacci levels, pattern formations, and overall trend can strengthen the trade signal. Therefore, you should look for instances where these elements align. 6. Watch for price gaps and/or wide-ranging candles in the CD leg: As the market approaches point D, it is important to monitor for any price gaps or wide-ranging candles in the CD leg. These may indicate a potential strongly trending market, and you might expect to see price extensions of 127.2% or 161.8%. 📉 Bearish ABCD Pattern Characteristics (sell at point D): To effectively trade the bearish ABCD pattern, you might consider the following characteristics: 1. Find AB: Identify point A as a significant low and point B as a significant high. During the move from A up to B, ensure that there are no lows below point A and no highs above point B. 2. After AB, then find BC: Point C should be higher than point A. In the move from B down to C, there should be no highs above point B and no lows below point C. Ideally, point C will be around 61.8% or 78.6% of the length of AB. However, in strongly trending markets, BC may only be 38.2% or 50% of AB. 3. After BC, then draw CD: Point D, which marks the completion of the pattern, must be higher than point B, indicating that the market has successfully achieved a new high. During the move from C up to D, there should be no lows below point C and no highs above point D. 4.1 Determine where D may complete (price): To determine the price level at which point D may complete, Fibonacci and ABCD tools can be utilized. CD may equal AB in price, or it may be 127.2% or 161.8% of AB in price. Alternatively, CD can be 127.2% or 161.8% of BC in price. 4.2 Determine when point D may complete (time) for additional confirmation: For additional confirmation, you can analyze the time aspect of the pattern. CD may equal AB in time, or it may be around 61.8% or 78.6% of the time it took for AB to form. Additionally, CD can be 127.2% or 161.8% of the time it took for AB to form. 5. Look for Fibonacci, pattern, trend convergence: Convergence of Fibonacci levels, pattern formations, and overall trend can strengthen the trade signal. Therefore, you should look for instances where these elements align. 6. Watch for price gaps and/or wide-ranging bars/candles in the CD leg: As the market approaches point D, it is important to monitor for any price gaps or wide-ranging bars/candles in the CD leg. These may indicate a potential strongly trending market, and you might expect to see price extensions of 127.2% or 161.8%. 💜 We're eager to hear from you! ⚡️Did the ABCD pattern article hit the mark for you? We're all about delivering content that's useful and easy for traders like yourself. Your feedback means a lot—it guides us in enhancing our articles to better serve you. Take a moment to let us know what you think. Did we cover the topic thoroughly? Were our explanations crystal clear? Is there something you wish we'd delve into more? Your time and thoughts are truly appreciated. Thanks for being a cherished reader, and we can't wait to hear your feedback!
Education
by Vestinda
6
Fibonacci: Advanced PatternsBuilding upon the foundational understanding of Fibonacci retracements and extensions explored in Part 1 (Fibonacci: The Fundamentals), this sequel ventures into the world of advanced Fibonacci patterns. We introduce the two best known advanced Fibonacci patterns; the Gartley and Cypher. We break the patterns down into their essential components, teach you how to trade them and give you some tips that have the potential to boost the patterns probabilities of success. Introducing Advanced Fibonacci Patterns At first glance, advanced Fibonacci patterns can look like a confusing web of letters and numbers, but each pattern as two essential elements: 1. Impulse leg (X-A) – This is the foundation of the pattern. The X-A impulse leg should represent a clear and obvious period of directional price movement. 2. A-B-C-D sequence – This is a combination of Fibonacci retracements and or extensions. Some of these retracements and extensions will be precise and some will specify a zone of acceptable Fibonacci levels. The patterns present a clear and objective framework for selecting and managing trades. And whilst there will always be a great deal of debate surrounding the use of Fibonacci levels in financial markets, these advance patterns offer a roadmap to consistent trade selection and management which can be applied to many styles of trading. I. Gartley Pattern The Gartley pattern has a beautiful harmonic aesthetic. The pattern essentially looks to enter the market on a two-legged pullback from the impulse leg highs. The two-legged pullback should take the market back down to the 61.8% to 78.6% retracement of the impulse leg – creating a trade setup which has attractive levels of risk reward. Here are the Gartley pattern rules that must be met: AB retraces XA by 61.8% BC retraces AB by 38.2% to 88.6%. CD retraces XA by 61.8% to 78.6%. Gartley Pattern Past performance is not a reliable indicator of future results How to Trade the Gartley Pattern: Entry and Stop: Traders typically enter upon completion of the pattern near the D point, implementing a stop-loss below or above point X. Targets: Point C makes for a clean initial target, with secondary targets coming in at point A – the peak of the impulse leg. Tip: Rather than simply entering on D – wait for a reversal candle pattern to form. This can help to ensure that your entry is aligned with short-term and can help to tip the probabilities of success in your favour. Bullish Gartley Example: GBP/USD 4-Hour Candle Chart Past performance is not a reliable indicator of future results Bearish Gartley Example: GBP/AUD Hourly Candle Chart Past performance is not a reliable indicator of future results II. Cypher Pattern The Cypher pattern is characterised by an “M” shape when bullish and a “W” shape if bearish. The pattern looks to enter the market following a deep 78.6% retracement of a two-legged trending move up or down. A key point of difference is the Cypher pattern measures the 78.6% retracement from points X-C. Here are the Cypher harmonic pattern rules that must also be met: AB retraces XA by 38.2% to 61.8%. BC extends XA by 127.2% to 141.4%. CD retraces XC by 78.6%. The Cypher Pattern: Past performance is not a reliable indicator of future results How to Trade the Cypher Pattern: Entry and Stop: Like the Gartley pattern, traders typically enter upon completion of the Cypher pattern near point D point, implementing a stop-loss below or above point X. Targets: Initial target is a 61.8% retracement of point C to Entry level. Secondary targets are a retest of the pattern high/low at point C. Tip: Zoom out on your price chart and pay attention to the wider market structure. Look to take Cypher patterns which align with the bigger picture trend as this will boost your probabilities of success. Bullish Cypher Example: EUR/CAD Daily Candle Chart Past performance is not a reliable indicator of future results Bearish Cypher Example: GBP/USD Hourly Candle Chart Past performance is not a reliable indicator of future results Summary: Advanced Fibonacci patterns provide traders with structure. They are essentially ready-made trade plans that can help to improve discipline and consistency in trade selection and trade management. Don’t forget to consider the wider market structure when selecting Fibonacci trades and use candle patterns to refine the timing of your entry. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Education
by Capitalcom
The EWT Explanation as to why I'm BullishThe elliot waves i have explained on the chart, with fib extenion levels of .127, 1.36, 1.50, 1.62, 1.78, with 1.5 being the mean. there are numbers up to 2.44 and higher... As i have explained before at any instant there is a 50/50% chance of going up or down, all other indicators i have seen, except Squeeze pro, and EWT 80% chance of success. So be ready for a download too, 20% hance think like Sun Tsu we are on deadly ground using out level 3 platforms, the Brokers probably have level 7 screens by now it used to be level 5 screens. If Paper wants to rip a hole in our little bullish world of chop and begin the MAXIMUM PROFITS downslide downtrend we all dream of finally being short As hell andmaking huge profits shorting all day long from R5 down to S6 or S7 I have been trying to teach everyone how to spot EW 4 and stay in a trade w/o paying hundreds of dollars a day in commissions, after wave 4 you get a rocket ship on steriods, impuslive, complex and in the TREND UP.
CME_MINI:MNQ1!Education
by dryanhawley
Fibonacci Retracement/Extensions- How & Why? | Live ExampleFibonacci retracements in technical analysis of various assets use a mathematical sequence discovered by Italian mathematician Leonardo Fibonacci. This sequence is a series of numbers where each number is the sum of the two preceding ones: 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on. In stock trading, Fibonacci retracements are used to identify potential levels of support or resistance during price corrections. Imagine you have a stock that has been rising in price for some time. Suddenly, it starts to decline. Traders who use Fibonacci retracements believe that during this downward movement, the stock price will likely retrace or bounce back to certain levels before continuing its downward trend. These retracement levels are derived from the Fibonacci sequence. The most commonly used levels are 38.2%, 50%, and 61.8%. For example, if a stock's price drops from 100 to 80, traders would expect it to bounce back to around 88.20 (38.2% retracement), 90 (50% retracement), or 93.20 (61.8% retracement) before continuing its decline. While their effectiveness is debated just like any other tool, many traders including myself believe that these levels act as psychological support or resistance points due to the large number of market participants who follow this approach. Let us get back on the example above. I drew a trendline which had helped me back in 2021 to predict the top in GOLD. This is the perfect example of how EVERY PRICE movement matters. The Fibonacci levels are derived from levels from 2008. In this example the Fibonacci extension level 3.618 held as a perfect resistance for the price of GOLD. 2008 to 2023, isn't this amazing? How long can a single price movement can have its affect! How to draw a Fibonacci Retracement/Extension? It's fairly simple. Just plot one end of the fib to the high of the price movement and the other to the low or vice versa. I'll answering all your queries in the comments below. Please feel free to reach out!
TVC:GOLDEducation
by YieldYogi
2
Harmonic Patterns in Trading: A simple introductionIntroduction In the world of trading, we often hear about harmonic patterns. These are very special tools in the trader's toolkit. They are complex but very important. In this article, we look into these patterns, how traders use them, and why they are crucial. Understanding Harmonic Patterns Harmonic patterns are part of technical analysis in trading. They come from Fibonacci numbers and show potential future price movements. These patterns are not random; they are specific geometric shapes in the markets. Some well-known patterns are Gartley, Bat, Butterfly, Crab, and Shark. Each pattern is unique and uses Fibonacci in a different way. Top Harmonic Patterns Gartley Pattern: This is a very famous pattern. It looks like an 'M' or 'W' shape. It helps traders to find good points for buying or selling. Bat Pattern: This pattern is similar to Gartley but with different Fibonacci measurements. It's known for its high accuracy in predicting market reversals. Butterfly Pattern: This pattern indicates a strong reversal. It's like Gartley and Bat but has a longer 'wing'. Crab Pattern: Known for its extreme accuracy, the Crab pattern offers precise entry and exit points. Shark Pattern: This is a newer pattern. It helps to identify very sharp and sudden changes in the market. Fibonacci and Markets: A Symbiotic Relationship Fibonacci sequence is a series of numbers important in many areas, including markets. Traders use these numbers to predict where the market might go. Importance of Harmonic Patterns in Trading Predicting Markets: These patterns help traders to guess future market movements, unlike other tools that only analyze past data. Strategic Trading: They offer clear points for entering and exiting trades, which helps in planning. Versatility: Useful in various markets like forex, stocks, and cryptocurrencies. Risk Management: They provide structured ways to manage trading risks. Complementing Strategies: Harmonic patterns can be combined with other market analysis methods for stronger trading strategies. Learning Curve Understanding harmonic patterns requires time and market knowledge. But they offer a clear insight into market behavior, which is very valuable for traders. Challenges Using harmonic patterns can be tricky. They need correct identification, and market volatility can sometimes affect their accuracy. So, traders need to be adaptable. Conclusion Harmonic patterns are a mix of mathematics and market understanding. They use Fibonacci to interpret market movements. For traders willing to learn, they offer deeper market insights. In trading, understanding these patterns can be a great advantage.
Education
by GreenCryptoTrades
What is the best indicator to use in Forex Market?There is no single "best" indicator for analyzing the forex market, as different indicators serve different purposes, and the effectiveness of an indicator can depend on various factors, including market conditions and individual trading styles. Traders often use a combination of indicators to make informed decisions. Here are some widely used indicators: 1. Moving Averages: Purpose: Smooth out price data to identify trends over a specified period. Types: Simple Moving Average (SMA), Exponential Moving Average (EMA). Use: Identify trend direction, potential reversals, and crossovers. 2. Relative Strength Index (RSI): Purpose: Measure the speed and change of price movements. Use: Identify overbought or oversold conditions. Values above 70 indicate overbought, while values below 30 indicate oversold. 3. Moving Average Convergence Divergence (MACD): Purpose: Identify the strength, direction, momentum, and duration of a trend. Components: MACD line, Signal line, Histogram. Use: Signal crossovers, divergence/convergence with price. 4. Bollinger Bands: Purpose: Identify volatility and overbought/oversold conditions. Components: Middle Band (SMA), Upper Band, Lower Band. Use: Identify potential reversals when prices touch the bands. 5. Stochastic Oscillator: Purpose: Measure the location of a current price in relation to its range over a period. Use: Identify overbought or oversold conditions. Similar to RSI. 6. Fibonacci Retracement: Purpose: Identify potential reversal levels after an impulse move. Use: Determine potential support and resistance levels. 7. Ichimoku Cloud: Purpose: Provide information about support, resistance, trend direction, and momentum. Components: Conversion Line, Base Line, Cloud, Lagging Span. Use: Identify trend direction and potential reversal points. 8. Average True Range (ATR): Purpose: Measure market volatility. Use: Set stop-loss levels, identify potential breakouts. 9. Parabolic SAR: Purpose: Follow the direction of a trend and provide potential reversal points. Use: Determine trend direction and potential entry/exit points. 10. Volume Indicator: Purpose: Show the number of shares or contracts traded. Use: Confirm the strength of a trend, identify potential reversals. Important Considerations: Combining Indicators: Many traders find success by using a combination of indicators to confirm signals and reduce false signals. Adaptability: Market conditions change, and indicators that work well in one scenario may be less effective in another. Risk Management: No indicator guarantees success. Proper risk management is crucial in trading. Ultimately, the "best" indicator depends on your trading strategy, risk tolerance, and personal preferences. It's advisable to experiment with different indicators and develop a strategy that suits your trading style. OANDA:XAUUSD FX:GBPUSD FX:EURUSD CAPITALCOM:DXY
Education
by DForexCaptain
Which ticker has higher chance of moving Upward???Price action at the lower border of an upward channel has a higher chance of moving upward than price action at the upper border of a downward channel. This is because an upward channel is formed by higher highs and higher lows, which indicates an uptrend. When the price reaches the lower border of the channel, it finds support at a previous level and is more likely to bounce back and continue the uptrend. On the other hand, a downward channel is formed by lower highs and lower lows, which indicates a downtrend. When the price reaches the upper border of the channel, it encounters resistance at a previous level and is more likely to be rejected and continue the downtrend. Of course, there is no guarantee that price will always move in the expected direction. However, the technical analysis principles described above suggest that price action at the lower border of an upward channel has a higher chance of moving upward than price action at the upper border of a downward channel. It is important to note that price action is just one factor to consider when making trading decisions. Other factors, such as overall market conditions and fundamental analysis, should also be considered.
NASDAQ:QQQEducation
by Moshkelgosha
6
How to hedge with Futures when they go crazyOK so according to our Pivots plan we well R5... When do you do when the FOMC announces, bascially nothing, we won't raise and Retail rallys the market and just keeps relentlessly climbing higher? One thing you could do is to buy protective options just in case this happens on FOMC day. If you write calls and take your profits up front you don't get killed by Theta... Theta works in your favor. Another option is to buy the next contract month long. If you only have enough money to have sold 3 current month contracts for December, your Broker should allow you to buy 3 March contracts, for example, why? Because you are reducing your risk.
CME_MINI:MNQH2024Education
by dryanhawley
MASTERING MARKET STRUCTURE : BOS, CHOCHBreak of Structure: This term is used in trading and technical analysis to describe a significant change in the price action of an asset. It occurs when the established pattern of higher highs and higher lows (in an uptrend) or lower highs and lower lows (in a downtrend) is disrupted, indicating a potential change in market sentiment and trend direction. Examples of Break of Structure: You can find examples of "break of structure" in both bullish and bearish movements. In a bullish scenario, a "break of structure" occurs when a new Higher High (HH) is formed, surpassing the previous High (H). In a bearish context, it happens when the price forms a new Lower Low (LL) below the previous Low (L), indicating a potential shift in market sentiment and trend direction. Shift in Structure : Sometimes, a "break of structure" leads to a more profound change in market character, referred to as a "Shift in Structure." This often involves a transition from a bullish to a bearish trend or vice versa. Change of Character (CHOCH): The first instance of a significant shift in market sentiment and trend direction is termed "Change of Character" (CHOCH). This emphasizes the unique nature of the initial change. Break of Structure (BOS): Subsequent occurrences of a similar shift in market sentiment are labeled as "Breaks of Structure" (BOS). These serve to differentiate the first significant change from those that follow. These concepts are vital in trading and technical analysis as they help traders identify changes in market sentiment, adapt to evolving trends, and make informed trading decisions. Recognizing a "break of structure" and understanding when it leads to a "shift in structure" is essential for effective trading.
Education
by BlackWatch01
My favourite intraday setup!!Here is A mark up of one of my favourite setups to trade, of a live example that students and I capitalised on earlier this week on US30. 1. Identify trend & Momentum. 2. Wait for corrective move & inducement pattern (wedge) 3. Once price breaks the wedge to the downside this stop hunts the buyers who where anticipating the breakout. 4. Now buyers have been removed but also Sellers induced because we instead broke out to the downside. 5. Therefore creating liquidity to the upside which is the direction the market wants to move. 6. Price then makes a final re accumulation just above our zone of confluence (final inducement). 7. Price then sweeps the re accumulation lows (final stop hunt) and taps into our zone of confluence = 0.618 from impulse low to high & 1H order block. Conclusion retail sellers and buyers have been taken out the market finally makes the intended move. STUDY this setup for high probability high reward trades.
CAPITALCOM:US30Education
by FOREXFIT
What is "Hedging"?Hedging is a transaction implemented to protect an existing or anticipated position from an unwanted move in exchange rates. Hedging is used by a broad range of market participants, including investors, traders and businesses. When hedging is properly used, an individual who is long on a trade can be protected from downside risk. Alternatively, a trader or investor who is short on a trade can be protected against upside risk when hedging is properly used. Let's take look at the recent CRYPTOCAP:BTC upside move from 24900 on 11 Sep '23. In the attached image, #BTC swing move started at the first "LONG" Label. This trader would hedge (i.e. SHORT) at the level that's labeled "HEDGE" because the upside move is not over yet. The trader would close the short position and open a long position at the second "LONG" label, while still holding the initial long position from 24900. The trader should now have two long positions open. Again, this trader would hedge at the second "HEDGE" label and close the short position and open a long position at the third "LONG" label while still holding the initial long positions, making the trader's open positions to be three. The trader is expected to continue to hedge until his/her final target is reached or the swing move is trauncated.
BITSTAMP:BTCUSDEducation
by ilesanmipepsi
SPX Trading The Pivots 30" charts & why use ETFsYesterday at the close we hit S4 and so without any stress or agonizing over it (can we go higher, is this the right level) I loaded up on SPXS, which I use because it is cheap so I can make a decent profit with sheer number of shares. During the night and this morning I checked the market and Alerts were going off we had reached S5, so again, no stress just trade the plan* So I took profits on the SPXS and since we were reversing to go up I bought TQQQ, again due to a cheap price so I can buy lots of shares. Why not use the Futures? I have daytraded hundreds of thousands of times and when I daytrade Futures i watched the 1" and 3" and tick charts and overtraded, giving my Broker so much profit from the volume, and from having been a Trainer I know for a fact even Computer and Security Engineers can only maintain focus for so long (20 minutes of teaching and they are thinking about a snack or reading email). I don't care how great you think your focus nobody can stay focused watching 1" or tick or range charts for 7 hours. Brokerages came up with "pattern daytrading" rules for a reason, to make more profit for them and make it harder for us to profit. I flipped the script on them, by trading ETFS I am forced not to overtrade. If you have been paying attention I have made about 8 or 10 trades in the last few weeks in the SP 500 room, all of them but 1 were winners (it was late in the day and they had been creating chap all day running up and down 6-10 points, sharply reversing, all day long and yes I wasn't focused to "took a small loss that a day later would have been a winner. This is nother reason you don't have to stress at all with this style of low stress high profit trading, because we see time and time again they revisit previous levels.... When I am in the room letting ya'll know what is happening realtime it is advice for daytraders there is not much to say about my trading style... I can set an alert at R4 and go back to bed now. I point this out because some people seem to be confused by my complex charts, I pay more to get a lot of information across 10 templates, which contributes as to why my calls are almost always correct, but I have started removing indicators so ya'll can see easier with less confusion... When i am talking in the room it is to share my gift of an ability to correctly tell you exactly what is happening, it annoys some that i am so often right, a form of jealousy, not my problem. I am only there to teach, which I love, and to help... my trading style doesn't require me to sit in front of charts all day I do it for fun and to help. *1 buy at S4 or S5, sell at R4 or R5 (based on the chart and recent activity, rarely do we reach the 5 levels.
CME_MINI:ES1!Education
by dryanhawley
Reversal Chart Pattern: WedgeWhat this chart pattern shows us is a loss of trend strength and a deceleration in price movement. The most achievable projection for setting our take profit will be the maximum width of the pattern, which occurs at the beginning of it. Alternatively, you can take the level that marks the start of the correction as a profit-taking point. As for the stop-loss level, it will depend on the type of entry made in the trade, whether it's a high-risk entry or a reduced-risk entry. (Like any other pattern or indicator, this one provides a signal of a possible market move. Therefore, the greater the number of confluences, the higher the probability that the observed scenario will occur). 💼💹 (🇬🇧)
Education
by FinanzasTip
Beautiful Butterfly Tells about Targets of Buyers/ Sellersthe detail is shown in the above Chart. I made this Idea based on Harmonic pattern using Fibonacci tools. The Butterfly pattern is a reversal pattern composed of four legs, marked X-A, A-B, B-C and C-D. It helps you identify when a current price move is likely approaching its end. This means you can enter the market as the price reverses direction. The above chart is a bearish version of the pattern, where you would be look to sell AMZN after the pattern has completed. X-A In its bearish version, the first leg forms when the price falls sharply from point X to point A. A-B The A-B leg then sees the price change direction and retrace 78.6% of the distance covered by the X-A leg. The Butterfly is similar to the Gartley and Bat patterns but the final C-D leg makes a 127% extension of the initial X-A leg, rather than a retracement of it. B-C In the B-C leg, the price changes direction again and moves back down, retracing 38.2% to 88.6% of the distance covered by the A-B leg. C-D The C-D leg is the final and most important part of the pattern. As with the Gartley and Bat pattern you should also have an AB=CD structure to complete the pattern, however the C-D leg very often extends forming a 127% or 161.8% extension of the A-B leg. As a trader you would be looking to enter at point D of the pattern. How to trade a bearish Butterfly To trade a bearish Butterfly pattern, place your sell order at point D (the 127% Fibonacci extension of the X-A leg), position your stop loss just above the 161.8% extension of the X-A leg and place your profit target at either point A (aggressive) or point B (conservative).
UEducation
by SEYED98
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