Category: Technical Analysis 101

Using Multiple Time Frame Analysis

While using a combination of technical indicators can help confirm price movements and filter out false signals, most traders opt to conduct multiple time frame analysis for additional confirmation. This method simply involves looking at the same currency pair across various time frames, from the short term 15-minute to...
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How to Trade Divergences

As you’ve learned in the previous sections, technical indicators and price action tend to move in tandem. For instance, when stochastic starts heading lower from the overbought zone, the corresponding currency pair usually sells off. On the other hand, stochastic climbing out of the oversold area indicates that the...
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Elliott Wave Analysis 101

A combination of repeating price patterns with Fibonacci analysis yields another branch of technical analysis known as Elliott Waves. This is named after its founder Ralph Nelson Elliott who analyzed 75 years’ worth of stock data before formulating and compiling his theories in a book entitled The Wave Principle....
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Basic Forex Chart Formations

Aside from technical indicators and Japanese candlestick patterns, another main component of technical analysis is chart formations. Remember that the concept behind technical analysis is that price patterns tend to repeat themselves, which means that these chart patterns more or less result to the same price behavior later on....
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Using Momentum or Lagging Indicators

As opposed to leading indicators which generate early trade signals, momentum or lagging indicators give confirmation signals when the trend has already found directional momentum. Because of that, lagging indicators are also known as trend-following indicators. One of the most basic examples of lagging indicators is the moving average...
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Using Oscillators or Leading Indicators

When it comes to using leading indicators, a good way of remembering how they work is to understand that they “oscillate” between two points, hence the name oscillator. This means that they bounce back and forth from point A to point B, which is another way of saying that...
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Types of Technical Indicators

Technical indicators are grouped into two main classifications: oscillators or leading indicators and momentum or lagging indicators. Moving averages, as discussed in the previous section, typically fall under the category of lagging indicators but the parameters can be modified or shifted to allow it to act as a leading...
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How Moving Averages Work

This section covers the basic technical indicators used in forex trading, the most common of which is the moving average. As the name suggests, this kind of technical indicator measures the average closing price of the currency pair for a specified period. For example, using the moving average (20)...
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Using the Fibonacci Tool with Technical Indicators

The use of Fibonacci retracement and extension levels could also be combined with technical indicators. For instance, one can enter at market when stochastic has already made a turn from the overbought or oversold area and price is showing signs of bouncing off a Fibonacci level. Similarly, one can...
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Using the Fibonacci Tool with Trend Lines

As discussed in the previous sections, Fibonacci retracement is often used during trending market environments so it makes sense to combine it with the use of trend lines. Of course this also requires one to be able to draw trend lines properly, and the rule of thumb is to...
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