Have you ever noticed how price movements look similar across different timeframes? This is Fractality in Trading, a concept that suggests markets behave in repeating patterns regardless of scale. In the chart above, we compare the 1-Day (left) vs. 1-Week (right) timeframe for NASDAQ 100 Futures. Despite the difference in time horizons, the price movements,...
The Double Bottom pattern is a classic reversal formation that signals a potential trend change from bearish to bullish. It occurs after a prolonged downtrend when price forms two distinct lows at a similar level, indicating strong support. How to Identify: ✔️ Two Lows: Price touches the same support level twice, forming a "W" shape. ✔️ Resistance Breakout: The...
The market has been in a clear bearish trend, forming a descending channel with lower highs and lower lows. However, we are now witnessing signs of stabilization as price action begins to consolidate at a critical level. 🔍 Key Observations: - The price has tested resistance twice around 20,800, failing to break higher. This signals strong selling pressure at...
The MACD (Moving Average Convergence Divergence) is one of the most widely used technical indicators, helping traders identify trend direction, momentum shifts, and potential buy/sell signals. How the MACD Works: 📌 MACD Line (Blue): The difference between the 12-period EMA and the 26-period EMA. 📌 Signal Line (Orange): A 9-period EMA of the MACD line, smoothing...
The Double Top is one of the most well-known bearish reversal patterns in technical analysis. It signals a potential trend change from bullish to bearish and can provide traders with strong shorting opportunities when confirmed. How It Works: 1- Formation: The price reaches a resistance level twice, failing to break higher, creating two peaks at a similar...
The S&P 500 has broken below its 100-day simple moving average (SMA), a key technical level that many traders and institutions use to gauge trend strength. Historically, when the price falls below this moving average, it often signals a potential shift in market sentiment. What This Means: 🔹 Potential Trend Reversal? If the index fails to recover above this...
Elliott Wave Theory is a powerful tool for predicting market movements by analyzing repetitive price patterns driven by investor psychology. The theory divides market trends into five impulsive waves (1-5) and three corrective waves (A-B-C). Let's break it down: 🔹 Impulse Waves (1-5) Wave 1: The start of the trend, usually fueled by early investors. Wave 2: A...
Fibonacci retracement is one of the most powerful tools traders use to identify potential support and resistance levels in trending markets. These levels, derived from the Fibonacci sequence, help predict where price pullbacks might end before the trend resumes. How Does It Work? 1- Identify a strong move (trend direction). In this case, we see an uptrend after a...
Candlestick patterns are a powerful tool for identifying market sentiment and potential reversals. Let's break down some key single and double candlestick formations seen in this chart: 🕯️Single Candlestick Patterns: - Doji – Represents indecision in the market, signaling a potential reversal. - Inverted Hammer – A bullish reversal pattern after a downtrend,...
The Bearish Pennant is a classic continuation pattern that signals the market is likely to resume its downtrend after a short consolidation. It consists of two key components: 🔻 The Flagpole – A strong, impulsive move downward, indicating high selling pressure. 🔻 The Pennant – A brief consolidation with lower highs and higher lows, forming a small symmetrical...
The Relative Strength Index (RSI) is a momentum indicator that helps traders identify overbought and oversold market conditions. It ranges from 0 to 100, with two key levels: ✅ RSI < 30 → Oversold: The asset is potentially undervalued, indicating a buying opportunity. 🚨 RSI > 70 → Overbought: The asset is potentially overvalued, signaling a potential...
The Simple Moving Average (SMA) is a powerful trend-following tool that helps traders identify buy and sell opportunities. In this chart, we use: SMA 20 (Purple Line) → This moving average represents the average price of the last 20 candles. Since it reacts quickly to price changes, it reflects short-term momentum and helps identify early trend shifts. SMA 100...
The Head & Shoulders pattern is a classic bearish reversal formation that signals a potential trend change from bullish to bearish. It consists of three peaks: Left Shoulder: A rise followed by a decline. Head: A higher peak forming the highest point of the pattern. Right Shoulder: A lower peak, similar in height to the left shoulder. Neckline: A support level...
The Supertrend Indicator is a widely used tool among traders to identify the prevailing trend and generate buy/sell signals based on market momentum. It works by calculating a dynamic support and resistance level using the Average True Range (ATR) to adjust for market volatility. The indicator plots a line above or below the price, acting as a trailing...
In this chart, we can observe how price action follows a structured pattern of trends, reversals, and breakouts. The market moves in cycles, creating bearish and bullish trends that traders can capitalize on by identifying key areas of support and resistance. At the beginning of the chart, we see a bearish trend, characterized by lower highs (LHs) and lower lows...
Bollinger Bands are a technical indicator used to measure market volatility and identify overbought or oversold conditions. They consist of three bands: - Middle Band – A 20-period Simple Moving Average (SMA). - Upper Band – SMA + 2 standard deviations (indicates overbought). - Lower Band – SMA - 2 standard deviations (indicates oversold). Key Strategies: -...