Ascending wedge

Ascending wedge is a bear model that begins with the formation of a broad base and narrows as the upward movement in prices when trading range is compressed. In contrast to the symmetrical triangle, which does not have any particular inclination, neither bovine nor Bear gradient rising wedge is definitely tilted up and have a bearish bias. Although this article focuses on the ascending wedge as turning on the model, it can also be included in the category of continuation patterns. As a model to continue, rising wedge will still tilt up, but the slope will be against the prevailing downward trend. As a model of turning, ascending wedge tilted upward in the direction of the prevailing trend. Regardless of the nature (or the continuation of a turn), rising wedge is considered as a model for bear.

1. Prior Trend: To qualify as a model of formation of turn, must be prior to the trend to turn. Usually, the bottom gusset is formed over a period of 3-6 months (for long-term scale), and can observe the medium-and long-term trend turns. Sometimes, the current trend is fully in ascending wedge, in other cases, the model is formed after a prolonged increase.
2. The top line of resistance: it is required at least two maximum reaction to form the upper resistance line, although ideally it would be three. Each reaction maximum should be higher than previous peaks.
3. The bottom line of support: requires at least two minimum reaction to form the bottom line of support. Each reaction must be at least higher than the previous minimum.
4. Convergence: The upper resistance line and lower support line converge as the model. Promotions from the reaction minimum (bottom line of support) are becoming shorter and shorter, making the rally unconvincing. This creates a top line of resistance, which can not maintain the same slope as the bottom line of support and show that the proposed increases to the extent of price increases.
5. Breakthrough Resistance: bearish character models are not confirmed until the line of support will not be convincingly broken. Sometimes prudent to await the break below the previous minimum of reaction. Once the support broken, sometimes it can be reactionary rally to test the newly created level of resistance.
6. Volume: ideally, if the amount will decline as the rising prices and a wedge. Increased support in the break lines can be bear proof.

Ascending wedge can be one of the most difficult graphic models to accurately recognize and related trade. At the same time as formation of consolidation, the loss of a rising momentum, with each enhancing the model gives its bearish bias. However, a series of higher highs and higher minimum support directly bullish trend. The final breakthrough of support indicates that the sellers finally won the battle and are likely to push down prices. In this model there is no technology for the design of a subsequent decline, so you need to use other aspects of technical analysis for purposes of measuring price.

Schedule "ANN" represents an excellent example of turning a rising wedge model, which was formed as a result of weakening of the momentum and cash flow.

• The previous trend is: starting from a minimum at around 10 in October 1998. ANN increased to 23 in less than 7 months. Last ascending branch is formed with a sharp increase from a level below 15 in February to 23.5 in mid-April.
• The top line of resistance: The upper resistance line was formed by three consecutive higher maximums.
• The bottom line of support: the bottom line of support was formed by three consecutive higher minimums.
• convergence: The upper resistance line and lower support line converge as the model. Visual assessment confirms that the slope of the bottom support line steeper than the upper line of resistance. The lower slope of the upper line of resistance indicates that the momentum fading, as the price makes new records.
• Breaking through the resistance: the price crept through the support of more than a week before the final break with a sharp decline. The previous reaction was overcome at least a few days later, a long black candle (red arrow).
• Volume: Chaikin money flow back into the negative zone in late April and was well below -10%, when the support line was broken. It has also been increased when he was breaking the previous reaction minimum.
• Support from the April level in the reaction area 20 has turned into resistance, and the price tested that level in early July, before declining further.

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The double peak (a model of turn)

The double peak is a major turning model, which is formed after a long ascending trend. As its name implies, the model consists of two consecutive peaks that are approximately equal to each other with a moderate depression among them.

Although there may be various options, the classic double peak observed at least medium, if not long-term change of trend from bearish to the bovine. Many potential double peaks may be formed as the ascending trend, but still a key support is not broken, do not turn may be regarded as proven. For a better explanation of the model, let us look at the key moments in the formation and then explain an example.

1. Previous trend: As in any turning the model must be an existing trend to turn. In the case of double peaks, must be present a significant upward trend.

2. First Peak: The first peak should be noted the maximum point of the current trend. It is noteworthy that the first peak is quite normal and upward trend in this period shall in no case is at issue.

3. Depression: After the first reduction peaks occur, which usually ranges from 10% to 20%. Volume on the decline from the first peaks are usually insignificant. Reduction sometimes rounded or slightly extended, which may be a sign of sluggish demand.

4. Second Peak: Increase of depression usually occurs with low volume and encounters resistance from the previous maximum. Resistance from the previous maximum is quite expected. Even after the emergence of resistance, there is only the possibility of forming a double top. The model must still be confirmed. The period between the peaks can vary from several weeks to many months (for a large-scale) with a norm of 1-3 months. While preferred the same vertex, may be some differences. Typically, peak at around 3% from the previous maximum schitaetsya it is permissible.

5. The decline from the top: The subsequent decline from the second vertex must occur to increase the volume and / or accelerated decline, perhaps even with one or two GEPami. This decline indicates that the strength of a weaker demand than supply and testing support is inevitable.

6. Breakthrough of support: Even after the decline down to support a double apex turn, and the trend has not yet been formed. Breakthrough support for the lowest point between peaks completes the formation of double peaks. This should also happen with the increase in volume and / or accelerated decline.

7. Support becomes resistance: broken support becomes potential resistance, and sometimes happens that the new test of resistance at the reactionary rally. Such testing could offer a second chance to enter the market in the short side.

8. Price target: The distance from the point of break of support to the maximum may be deferred to bottom of support for pricing purposes. This means that the larger the formation, the greater the potential decline. While the model of "double peak" may seem simple, traders must comply with the appropriate steps to avoid misleading the double peaks. The tops should be separated at a sufficient distance. If the peaks are located too close to each other, they may just represent the normal resistance and no change in long-term picture of supply / demand. Make sure that the minimum between peaks fell at least 10%. The decline of less than 10% can not measure a significant increase in pressure sellers. After the reduction, Analyze depression to obtain information about the strength of demand. If the depression was brief and has problems with increasing back, the demand could dry up. When the price rises, watch the decline in the next sign of easing as demand.

Perhaps the most important aspect of the double peaks is to avoid premature entry into the market before receiving the signal. Wait until the support is broken convincingly, and typically with a volume. Can be applied filter price or time, to distinguish true from false break of support. Price filter may require a 3% first breakthrough support for confirmation of reliability. The filter may require time to break the support lasted for 3 days before it will be considered valid. The trend is in the Twin Peak (model spread) are not valid until proven otherwise. This also applies to double top. While support is not breached convincingly, the trend is ascending. Formation of double peaks for the shares of "Ford" took about 5 months. Even after a break of support, it was another test the new resistance to almost 4 months later.

1. From a minimum at around 10 in March 1997. price had risen to 36 by December 1998. Trend line, stretching up to March 1997. is an internal trend line, and the price kept above her to a breakthrough in May 1999.
2. From the top of the first price fell by about 15% to form a depression.
3. After reaching a minimum at 30 1 / 2 in early February, the depression formed over the next 2 months before the rally in early April. This long, elongated hollow point to the relatively slack demand.
4. Rally of 30 1 / 2 to 36.80 occurred at a fairly good amount, but cash flow is barely surpassed 10%. Maximum of 36.80 was estimated at 2% above the previous peak, but within 3% of threshold. The distance between two peaks was approximately 3 months.
5. The decline of 36.80 was GEPami with two down and an increase in volume. In addition, the Chaikin Money flow quickly moved below -10%. The speed with which decreased cash flow, indicated a serious increase in the pressure of sales.
6. In late May and early June, the market has traded for about 3 weeks from the previous support level. At this time, cash flow has fallen below -20%. Even though the situation looked quite a predefined model double peak would not be complete until support was broken.

7. The support was broken in early June, when the price fell below the 28 1 / 2, which was more than 3% below the support at 30 1 / 2. After this sharp decrease was the same sharp rise back above the new level of resistance. While testing the broken support completely expected, it usually does not occur so quickly. Increasing to 32 to mark the end of June may have caused some trouble with the holders of short positions, which jumped into the market at the first break of support. The price dropped to a mark 25 and then start increasing the recovery, which ultimately will test support.

The second graph, the level of 30 3 / 4 of the support become resistance level and the level of 31 noted a 50% reduction in recovery come from 36.80 to 25. Combining the price action in early June and early July, the zone of resistance, might be established between levels 31 and 32. Price subsequently formed a lower high at 30 in January 2000. and decreased to about 22 by mid-March.

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Candle Model

There are two important points to trade in financial markets. The first is that you can spend an entire life, trying to explore how it works. The second - that the markets offer great opportunities to earn their money. One of the old methodology, which was used for the analysis of price movements in any market - it is the Japanese candles, and their models. Price action when it is depicted in the graph, using candles, representing the price extremes, and the main range of trade, the model shows that are repeated. These repetitive patterns candle represent excellent opportunities for trade. Many traders are aware of the candle patterns, but they are not inclined to spend time and effort required to remember all the details included in each model.

Last year I spent a lot of time studying and considering the formation of candle patterns to see whether they bring any benefit to my trading. I found that there was a huge pile of books filled with lists of different types of bars and structures associated with candles. Some are very good, while the majority do not represent anything of value to trade. Several models, which I found useful in the real trade, have been extremely valuable. I found that they are easy to recognize and interpret. Points of entry and stop orders are very clear. The only problem for the trader is to find these models. To classify a series of price bars, as a certain candle patterns, should be executed a number of criteria, which include multiple combinations of minima to maxima, discovery against the closure, bull bars bear against the bars, which are all intertwined. Any trader knows that requires an incredible amount of time to see a schedule, to check whether a maximum or above the minimum below the minimum, etc. Needless to say, to remember all the combinations of rules and apply them to find appropriate situations in the graphs. An attempt to find these models at the intra-day charts, and does seem unrealistic. I greatly reduced the list of models, including only the most reliable of them. I have included this model in its trading system to use a very simple method. If, on the basis of its preliminary analysis, I get a message to sales, I am looking for any bear candle model for a good entrance to the short position. If I get a signal to buy, then I am looking for any bychi candle model for 5-minute charts for entry into a long position. You can also use our analysis methods in combination with these candle patterns to help you implement a sound and accurate entry into the market.

So let's look at a brief description of certain candle patterns, which can be viewed in any temporal form.

Forming candle patterns
All the models are well-known features, which represent a good trading opportunity. Models of the most reliable, when they occur at or near the levels of resistance or support Fibonacci. It is best to use candle patterns as signals to the end of the counter-trend movement. This candle can be useful models for any market, especially at vysokopodvizhnyh and highly liquid markets.

Bear candle model
1. Harami Bear - This bear turning model. Prices are rising, when the last bar in the formation stops. The body of the last bar is in the body of the previous bar. The last bar is a bear turning bar. It should be read in the short side, when the price moves below the minimum of the last bar formations. Stop order placed on the maximum level of the last bar model.

Red arrow shows the level of the entrance to the short position, which is below the minimum of the last bar model.
Please note: there are different combinations that constitute the model of "Bear Harami. The body of the bar, which is located inside the bar "Harami", may bear a bar instead of bovine bar used in a graphic example.

2. Confirmed bearish Harami (Three internal bar down) - This model occurs when the bar after the last bar model "Bear Harami confirms disservice model, closing below the closing price of Bear bar 'Harami. The tactics of trade on this model is to go to the short side, when the price moves below the minimum of the last bar of the model. This pattern occurs regularly and is considered the strongest signal to bear than the simple model of "Harami".

The red line indicated the level of the entrance to a short position when the price moves below the minimum confirming bar. Also, please note confirming the bar, which is to close following the closure of the bar 'Harami.

3. Medvezhye absorption - this model is formed, when prices rose, and the last was called to the bar formation GEPom up towards bovine trend, then turns and closes below the main body of the previous bovine bar. This creates a turning bearish bar, which consumes the body of the previous bovine bar. Technique is to go to the short side, when the price moves below the minimum of the last bar, which is a bar sinks. Use the maximum absorption of the bar as a level for placing stop orders. If prices are too far from the level of stop-order, then a closer logical level.

Red arrow to specify the level of the entrance to a short position on the bar below the minimum absorption.

4. Proven Medvezhye absorption (three external bar down) - This model occurs when the bar after the last bar model Bear absorption confirms disservice model, closing below the closing price of the bar Bear absorption. The method of trading is to go to the shortest side, when the price moves below the minimum of the last bar of the model. This model is considered more reliable than Medvezhye absorption.

Red arrow shows the level of the entrance to the short position below the minimum confirming bar.

5. Bear JB - this model occurs when you have three long-running bull bars, each with a higher maximum. The last bar in the formation is unable to reach a maximum of the previous bar and the bar is a bar with a narrow range. The method of trade is to go to the short side, when the price crosses the minimum of the last bar formations. Use the maximum of the last bar as a level for placing stop orders. (Although, it is not sufficiently widespread candle model, I have met many times before you add to your arsenal).

Red arrow to specify the level of the entrance to the short position below the minimum of the last bar model, which is a bear turning bar.

6. Bear left to a child - This is turning model bovine trend. Price increases and then makes the price bar GEO upwards. This bar has made the GEO, a bar with a narrow range. The lower shadow of the bar, making the GEO does not overlap a maximum of the previous bar. Price then in the next bar down, and makes GEO closes below the opening. Technique is to go to the short side, when the price moves below the last bar formations. Maximum last bar formation is used as a level for placing stop orders.

Red arrow to specify the level of the entrance to the short position below the minimum bar, opened with GEPom down.

7. Medvezhye dark cloud - turning this model, which occurs when prices increased. First, you must be a long bull bar. He is accompanied by the bar, which opens with GEPom above the closing price of bovine bar, but then declines at the close to average a point a long bovine bar. The tactics of trade is to go to the short side, when the price moves below the minimum of the last bar formations. Use the maximum of the last bar formation as a level for placing stop orders.

Red arrow shows the level of the entrance to the short position below the minimum turning Bear bar.

8. Medvezhye recent takeover - This is turning model, which is formed when prices rise. Then a bar bovine absorption. Price bar next to the bar is the absorption of bovine bear bar, which closed below the closing bars bovine absorption. This model is the most reliable, if it occurs at the maximum of the last 14 years. The method of trading is to go to the shortest side, when prices move below the minimum of the last bar formations. Maximum last bar is used as a level for placing stop orders.

Red arrow shows the level of the entrance to the short position below the minimum turning Bear bar.

9. Footballer Bear - This model can indicate the prices. It can occur anywhere on the graph, and will signal the spread of the trend. Bear football player is a model consisting of two bars, where the first bar represents a bullish bar. The next bar was called for the same price at which bovine bar opened, but changes direction and rose as bearish bar. Technique is to go to the short side, when the price moves below the minimum of the second bar. Maximum turning bar is the placement of stop-order. This model will be most effective if both bars are not bars with a narrow range.
Red line shows the level of the entrance to the short position below the minimum Bear turning bar and the placement of stop-order. In this example, with a 5-minute schedule, you can see that, depending on your trading style, this deal would be a winning position can be closed by stop-order. For the conservative style is to wait when the price closes below the minimum, before you enter into the market. If you prefer a more aggressive entry price and then turns up, it would be prudent to withdraw from the deal when you reach the level of stop-order and then re-enter the market at the same level.

Bychi candle model
1. Bullish Harami - This is the inverted version of the model "Bear Harami. This model arises when the price falls and then the last bar stopped and can not

to overcome the closure of the previous Bear bar. Bar "Harami" closes below the opening of the previous Bear bar. Therefore, the body of the last bar is in the body of the previous Bear bar. Tech trade in this model is to go a long way, when the price crosses the maximum bar "Harami". Place a stop order should be at the level of the minimum bar 'Harami.

Green arrow shows the level of the entrance to a long position above the maximum of the bar 'Harami', and red - the level of placing stop orders below the minimum of the bar. Please note that there are different combinations that constitute a "bullish Harami. The body of the bar, which contains a bar Harami, maybe a bar instead of bovine Bear bar, used in a graphic example.

2. Confirmed bullish Harami (Three internal bar up) - This model occurs when the bar following the formation "bullish Harami" rose above the closing of the bar "Harami". This is a confirmation of bovine Harami, and is a stronger signal. Engineering trade is to go a long way, when the price crosses up past the bar formation. At least the last bar is used as a level for placing stop orders.

3. Byche absorption - This model arises when the price has committed a decrease. The last bar in the formation was called to GEPom down and then rose above the opening of the previous Bear bar, absorbing all of his body. The method of trade in this model is to go a long way, when the price moves above the maximum absorption of bovine bar. Minimum bar uptake is used as a level for placing a protective stop orders.

Green arrow to specify the level of the entrance to a long position above the maximum absorption of the bar. The red line indicates the level of placing stop orders.

4. Proven byche absorption (three external bar up) - When the price is initially formed bovine model of absorption, if the next bar closes above the closing price of the bar bovine absorption, the model confirmed

and this is a more powerful signal than a simple byche absorption. Engineering trade is to go a long way, when the price moves above the maximum of the last bar formations. At least this bar confirmation is used to determine the level placement of stop-order.

Green arrow shows the level of the entrance to a long position above the maximum bar confirmation.

5. Bullish abandoned baby - This is turning model, which is formed when, after the fall of prices, the next price bar doing GEO down. This bar has made the GEO-down, is a bar with a narrow range and does not cross the previous Bear bar. The next bar opens from GEPom up and closed above its opening. Engineering trade is to go a long way, when the price moves above the maximum of the last bar formations. At least the last bar is used as a level for placing stop orders.

Green arrow shows the level of the entrance to a long position or closing above the maximum of the bar, made up of GEO.

6. Byche recent takeover - This is turning model, which occurs when, after the price dropped to a new level, it forms a bar Bear absorption. Bar, following this bar Bear absorption turns up and rose above the closing price of the bar Bear absorption. If this happens to 14-periodnom minimum, it increases the reliability of the model. Engineering trade is to go a long way, when the price moves above the maximum of the last bar formations. At least the last bar is used as a level for placing stop orders.

Price formed a bar Bear absorption, but the next bar turned and closed above the closing bars Bear absorption. Green arrow to specify the level of the entrance to a long position above the maximum turning bar.

7. Bovine footballer - turning this model occurs when the first bar formation is the bear bar. The second bar opens at the same level as the first bar, but moves in the opposite direction, rose as turning bullish bar. The method of trade in this model is to go a long way, when the price moves above the maximum of the second bar. This model would be more effective if both bars are not bars with a narrow range.

Green line shows the level of the entrance to a long position above the maximum turning bar. The red line indicates the level of placing stop orders.

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Triple Top

The triple peak is turning a model consisting of three equal maxima, accompanied by a break below the support. In contrast to the triple foundation, triple tops are usually formed over a short period of time. In general, the grounds need more time for its formation than the top. First, we explore some of the models and then consider the example

1. Previous trend: As with any turning model to be the trend for the preceding turn. In the case of the triple peaks, should be upward trend or long-term lateral trading range. In some cases it will be a pronounced upward trend, which should turn. In other cases, the rising trend is giving way to a long range side-commerce.

2. Three maximum:: All three of the maximum should be fairly equal among themselves, are well separated and celebrate significant turning points. Max does not necessarily have to be absolutely equal, but should be relatively equal to each other.

3. Volume: As a triple peak, the full amount is usually reduced. The amount is sometimes increased to their maximums. After the third peaks increased during the subsequent decline and with the break of support greatly improves the reliability of the model.

4. Breakthrough support: As with many other models, turning, triple node is completed before the break of support. The lowest point of formation, which is the lowest minimum of the intermediate cuts, said a key support level.

5. Support becomes resistance Subject: support becomes potential resistance, and sometimes going on testing this new level of resistance with the subsequent reaction rally.

6. Objective: The distance from the break of support to the maxima can be measured, and deferred to the level of support for a breakthrough goal of the subsequent decline.

The longer a model, the more significant will be the final breakthrough.

During the formation of the triple peaks, the model can begin to resemble a variety of models. Before the third peak is formed, the model may resemble a double peak. Three equal the maximum can also be found in the ascending triangle or rectangle. Of all these models, only the ascending triangle is bullish context, while others are neutral until a breakthrough occurs. Accordingly, the triple peak should also be seen as a neutral model, until a breakthrough support. The failure to break above resistance shows the potential effect of bears, but bears have not yet won the confrontation, has not yet broken the level of support. The volume of the last reduction of resistance can sometimes communicate the necessary information. If there is a sharp increase in the volume and momentum, the probability of a breakthrough support increases.

If you are looking for models, it is important to understand that technical analysis is more an art and less science. Interpretation of models must be sufficiently certain, but not to require excessive precision in order not to obscure the spirit of the model. The model may not correspond to the theoretical description, but this should not reduce its oshibkoustoychivosti. For example: it can be difficult to find a triple top with three maxima, which would be absolutely equal. However, if the peaks are located within reasonable proximity, and other aspects of technical analysis complement the picture, it is consistent with the spirit of the triple peaks. The spirit is triple tops in three attempts to test the resistance, accompanied by a break below the support, confirming the amount. Schedule "Rockwell automation", shown above, illustrates an example of a model "triple vertex, which does not correspond exactly to classical theoretical description, but captures the basic spirit of the model.

. The market is in an upward trend and has remained above trend line extending from October 1998. to break at the end of August 1999.

. For about 4 months, the price bounce off the resistance, which is approximately 23. The first attempt occurred in May, the second in July and the third in August. The third attempt was the weakest and the price is not reached through the resistance of 1.19 points, or approximately 1.8%.

. The decline from the third vertex has violated the support trend line, and the price continued to decline by support from the previous minima. Supporting the triple peaks should be held to the lowest wage model, which was marked in May by about 54.50.

. The volume increased after the price broke the support trend line. The market paused for a few days, when support for the 54.50 was achieved, but the level of accelerated growth when the level of support has been broken (gray dotted line). In addition, the Chaikin Money flow has been negative and broke below the value of -10%.

. After a break of support, a few weeks later, there has been testing newly-level resistance. Cash flow continued to point to an influx of offers for sale, and the volume increased when prices start to fall again.

. The planned reduction in size was 9 points, and the price has reached that goal soon after testing resistance.

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Rectangle

A rectangle is a continuation of the model, which is formed as the trading range during a pause in the trend. The model easily determined in the presence of two comparable maxima and minima of the two comparable. Maximum and minimum may be linked to form two parallel lines that make up the top and the base of the rectangle. The rectangles are sometimes referred to as trading ranges, areas of consolidation or congestion of the area.

There are many similarities between the models of "rectangle" and "symmetrical triangle". While both are usually continuation patterns, they can also note the significant tops and bases of trend. As in the case of the "symmetrical triangle" model "box" was not completed until a breakthrough occurred. Sometimes can be found some hints, but the line break is usually indeterminable in advance. Let's examine each part of the rectangle, and then look at an example.

1. Trend: To qualify as a model for the continuation of a rectangle, must exist prior to the time trend. Ideally, if the trend continues far enough, but not too mature. The more mature will be the trend, the less likely it is the continuation of the model.
2. 4 points: must be at least two equivalent maximum reaction to form the upper resistance line and the two equivalent minimal reaction to form the bottom line of support. They do not necessarily have to be exactly equal, but must be located within sufficient proximity to each other. Although not required, but preferable to maximum and minimum alternated between them.

3. Size: as opposed to "symmetrical triangle, rectangle does not show the standard models of volume. Sometimes the volume is reduced as the model develops. On another occasion the volume will move along a spiral, as the price is moving between support and resistance. Rarely volume will increase as the development model. If the volume is reduced, it is better to look for expansion in the break to confirm. If the volume is moving in a spiral, to better evaluate what traffic (increasing the resistance or to reduce the support) are more. This type of assessment of the volume can serve as hint on the direction of future breakthroughs.

4. Contrast: rectangles can range from a few weeks to many months (for the day-scale). If the pattern continues less than 3 weeks, it is usually considered a "flag" as a model to continue. Ideally, if the rectangle will develop for the 3-month period. In general, the longer the formation model, the more significant will be a breakthrough. From the 3-month-old model, you can expect that a breakthrough will meet its projected goal. However, the 6-month-old model, you can expect that a breakthrough will exceed the estimated target.

5. The direction of a breakthrough: the direction of the next significant movement can be determined only after the break. As in the case of the "symmetrical triangle, rectangles are neutral models, which depend on the direction of future breakthroughs. Models can sometimes amount to offer a hint, but no confirmation until the real breakthrough occurred above resistance or below support.

6. Confirmation of a breakthrough: to make a breakthrough to be valid, it must be based on closing prices. Some traders use a filter for the price (3%), time (3 days) or volume (expansion) to confirm the break.

7. Return to a breakthrough: the basic principle of technical analysis is that broken support turns into potential resistance, and vice versa. After a break above resistance (nizhepodderzhki), sometimes return to test this newly-level support (resistance). Return to the original level of breakthrough could provide an excellent opportunity to enter the market.

8. Objective: The planned value of the movement is by measuring the height of the rectangle, and he measured the distance from the point of breakthrough. The rectangles represent the trading range, which turns fierce struggle between the bulls and bears. When the price is near support, customers come into the game and pushed the price up. When the price is near the level of resistance, bears intercept the initiative and drive the price down. Literate traders often play on these strong push by buying some level of support and selling near resistance levels. One group (bulls or bears), in the end, exhausted itself, and there is a winner, when the breakthrough occurs. Again, it is important to remember that the rectangles have a neutral bias. Even though sometimes there may be hints in the form of other aspects of technical analysis, the actual price effect reflects market conflict. Only, until a breakthrough does not occur above the level of resistance or lower level of support will not be clear which group has won the battle.

During the summer of 1999., "Micron Electronics" has risen from about the twentieth to the fortieth figures. Once the resistance of about 42, the price settled in trading range between 30 and 40, forming a rectangle.

. increase from the twentieth to the fortieth figure was pre-installed interim trend. However, at the time it was unclear whether this trading range of the model of turn or continue. The horizontal line of resistance at 40 could be extended back to the peak in February 1999, which notes the serious level of resistance.
. red line resistance at 40 was formed by three reactionary maxima. First up may cause some suspicion, but the second and third are fairly clear. A parallel line of support at 30 has been raised three times and established a strong level of support. Once the maximum has been made in paragraph 5, the model "square" was formed.

As the model evolved, the volume fluctuated and there was no clear sign (bullish or bearish break) until mid-February. The first sign appeared bullish when the price dropped from 38 to 31, and Cash flow Chaikin was not able to go down below -10%. Cash flow was steady throughout the decline and has returned to positive territory as soon as the direction of the market turned up. By the time the price reached a mark of 39 3 / 4 (exceeds its previous maximum of the reaction), Chaikin Money flow was at level of 20%. Also, pay attention to increasing the force after a higher minimum.

. length of the model was 5 months. Because of the long-term ceiling of resistance at 40, the model required more time to consolidate before the breakthrough. Over a long consolidation offers hope for more traffic after the break.
. breakthrough came with a large and sudden increase in traffic above the level of resistance.
. after the breakthrough was a small roll to about 46, but if the volume pointed to a huge boost. The market is not always returned to the level of a breakthrough. In the considered example, the price makes a classic return to the level of a breakthrough. Formed pattern and strength of a breakthrough were to be evaluated properly to determine whether to enter the market after the downgrade.
. to improve after the break was 10 points, which were the width of the model. However, based on the length of the model and force a breakthrough, and an increase in new highs, it was clear that this was no ordinary break. Therefore, a standard design goal was useless. After the initial raise to 55 13/16, the market is back to level 46 and then rose above level 70. Subsequently developed a range of other trade resistance at the bottom of the 70th figure, and support at the top of the 40th figure.

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Cup with handle

"Cup with handle" is a continuing bull model, which marks a period of consolidation, followed by the breakthrough. It was developed by William O'Neill and presented in his book "How to make money on promotions in 1988.

In keeping with its name, there are two models: a cup and handle. A cup is formed after the increase and resembles a ball or rounded base. When the cup is formed, trading range develops on the right side and a pen. The subsequent break from the trading range handles signals the continuation of the previous bovine trend.

1. Trend: To qualify the model as a model to continue, there must be a prior trend. Ideally, the trend should be long enough but not too mature. The more mature the trend, the less likely that the model is the continuing or less potential for further upward movement.

2. Chashka: A cup should be U-shaped and resemble a ball or rounded base. V-shaped base is considered too severe to qualify as a turnaround. A more mild form of "U" guarantees that the cup is a model of consolidation with a good support at the base of "U". The perfect model would have an equal maxima on both sides of the cup, but this is not always the case.

3. Depth of cup: Ideally, the depth of the cup to restore 1 / 3 or less of the previous raise. However, in the context of volatile markets and excessive correction, recovery may be from 1 / 3 to 1 / 2 of the previous raise. In emergency situations, the maximum recovery could reach 2 / 3, which corresponds to Dow Theory.

4. Handle: After the formation of a maximum on the right side of the cup, there is No, which forms the handle. Sometimes it resembles a pen or a pennant flag, which is tilted down, in other cases, only a short setback. The handle represents the final consolidation / roll back before the big breakthrough, and can recover up to 1 / 3 cup of improving, but usually not more. The smaller the recovery, the more bull is a model and a more significant will be a breakthrough. Sometimes prudent to await the break above the resistance, set maximum cup.

5. Duration: Cup full-time schedules may extend up to 6 months depending on market-based instruments. The formation of the handle, in this case, can last from 1 to several weeks and ideally ends within 1-4 weeks.

6. Size: Should be a substantial increase in the break above the resistance handles.

7. Objective: Projected increase after the break can be estimated by measuring the distance from the right peak of the cup to its base.

As with most graphical models, is more important to capture the essence of the model than the details of it. Cup - it has the form of consolidation of the ball, and a pen - a short roll, accompanied by a breakthrough in increasing volume. Restoration of a cup of 62% can not meet the requirements of the model, but models of some market-based instruments can and in this case to capture the essence of the model "cup with handle.

Sample

. Trend: EMC has established bullish trend, increasing from 10 to above 30 in about 5 months. Market-based instruments has reached a maximum in March and then began to retreat and consolidate.
. Cup: The April decline was fairly sharp, but the minima in the period extended to two months to form a ball, who noted a period of consolidation. Also note that support for the formation of a minimum of 99g of February.
. Depth of cup: Min cup restored 42% of the previous raise. After months of June and July, the action has reached a maximum at around 32.69, to finish the formation of the cup (red arrow).
. Handle: Another period of consolidation began in July, forming the handle. It was a sharp decline in August, which prompted a pen to restore more than 1 / 3 cup improve. However, recovery was rapid, and the price quickly rose in the week within the normal limits of the handle. We will consider that the essence of the model remained valid after this sharp decline.
. Duration: Formation of a cup lasted for approximately 3 months, and the pens for about 1 1 / 2 months.
. Volume: In early September 2000. price broke the resistance handles to GEPom and increased (green arrow). In addition, Cash flow Chaikin soared above 20%.
. Objective: Projected increase after the break was evaluated at 9 points from the point of breakthrough, ie, at around 32. EMC easily comply with this objective in the next few months.

Forex Magazine
based on www.stockcharts.com

We sell patterns

Patterns pros and cons.

Before seeking any money in the financial markets at the beginning of the road faced with a choice - a method preferred. The choice is between the technical and fundamental analysis.

It should be noted that the usefulness of technical analysis, and especially its graphic methods, which include the patterns and, as a tool to predict the future direction of prices is constantly challenged.

Opponents of the use of patterns as arguments an accident resulting market price and as a consequence of the impossibility of allocating recurrent price formation, the complexity of quantifying the expression of image theory.

Supporters of the graphical analysis refer to one of the major axioms of technical analysis, the essence of which is that any factor influencing the price - economic, political, psychological - before noting the price, and thus reflected in the chart. Therefore, the study schedule of prices - a prerequisite for the prediction. Indeed, it is difficult not to agree with that. After all, the price is very sensitive to the change of external conditions. Also, do not forget the existence of the market group of insiders who make decisions based on the information until such time as it becomes available to a wide range of people. Given the fact that insiders usually have large financial resources, their activity will certainly take into account the price, and thus will be reflected in the chart.

Also do not forget that if certain types of analysis employed in the past, it will work in the future, because this work is based on the sustainability of human psychology. After all, in fact deals with the history of the graphical analysis of certain events connected with the market, and thus the study of human psychology. Indeed, the main reason for the movement of prices - the mood of market participants.

In its essential features, it is repeated throughout the history of the market and, accordingly, is reflected in the movements of the market graphs.

The schedule of prices provides an unequivocal and immediate reflection of the net impact of all the fundamental and psychological factors. On the contrary, the exact fundamental model, if at all possible to build, would be too complicated. In addition, the basic data for the forecast period will inevitably be estimated, which makes the results based on their prognosis is extremely sensitive to errors.

At the same time is difficult not to agree that sometimes it is difficult to assess the many graphical models quantitatively. And if there is no such mathematical evaluation, argue about the viability of graphical models as an indicator of prices, in general, becomes difficult.

What is the pattern?

In general, patterns can be described as a fairly wide range of repeating with a frequency models, images, setup figures, combinations of candles. This concept is unlikely to suit us, so it must be formalized. We will be interested in some images, the market situation, which in some points in time provide us with some of the possible (!) Statistical advantage, and are the property of repeat in time.

Thus, the trading system using the pattern must have the following characteristics:

1. patterns should have a positive expectation that the price will go in to our side. Otherwise, the meaning of this pattern is not.

2. discrete nature of finding a trader in the market. This is a very important point. Not necessarily trying to be in the market continuously. Waiting for the entrance - it is also attitude. But keep in their arsenal, some quite often applied to the market model to explain the different trading situations, it would be good.

3. trade patterns tend to be short term due to the fact that the pattern over time is typically short-term effects. It follows the special significance of the time when such a trade.

Indeed, judging from the limited validity of patterns over time, our trading plan should take into account the possibility of the position, not only for achieving the objectives of the calculated, but at the end of the pattern.

Consider an example. Suppose a trader has a certain tested model, which with a probability of 95% (dream trader) manage to realize its statistical advantage. Suppose that the average time for implementation of such a pattern (of course proven tests) was 10 days. Trader opened position, put a stop and take profit. The position may close due to trigger a warrant for any 10 days.

The longer the interval of stay in position, the situation becomes uncertain. Why is this happening? Because "normal" during the transaction can be broken any unexpected news or Top prevail, another group of traders ( "bulls" will take dominance over the "Bear" in "bear" pattern, and vice versa). If there is no violation of the "normal" during the transaction and before the end of your pattern of time (in this case 10 days), the objectives were not achieved, it is better to at least secure a position close to stop, or even better to close on time. Because the more we play is not our pattern, and then talk about the future potential statistical advantage does not make sense.

In future articles we will focus on how to look for patterns, look at the tools that will help us to better identify them, and perhaps look at some of them, which I think might be of interest.

Dmitry Melnikov
to Forex Magazine
fxtrade@tomsk.ru

Flags and pennants

Flags and pennants are short-term continuation patterns that mark a small consolidation before the previous motion to continue. These models are usually preceded by a sharp increase or decrease in the high and mid-point of motion.

1. A sudden movement: to consider this model as a model to continue, should be a prior trend. Flags and pennants require a sharp increase or decrease at a high level. These movements usually occur at a high level and may contain GEPy. This movement is usually the first stage of a significant increase or decrease, and a flag or pennant is just a pause.

2. Flagpoles: flagpole - is the distance from the first support to overcome resistance or to the maximum or minimum of a flag or pennant. A sharp increase (or decrease), which forms the flagpole should overcome the trend line or resistance level or support. The line, built by this breakthrough to the maximum or minimum of a flag or pennant shapes flagpole.

3. Flag: model «flag» is a small rectangle that is tilted against the direction of the previous trend. If the previous movement was upward, then bent down to flag down. If the previous movement was down, the flag is bent down to up. Since the model «flag» is usually too short in duration, to have actual reactionary maxima and minima, the price should be active only occur within two parallel trend lines.

4. Streamer: model «pennon» is a small symmetrical triangle that begins with the widest part and converges, as a model (like the cone). The slope is usually neutral. Sometimes will not be certain reactionary maxima and minima, to conduct trend line and price activity should only occur within the converging trend lines.

5. Duration: flags and pennants are short-term models, which can last from 1 to 12 weeks (full time schedule). There is some controversy on the duration, and some analysts believe that 8 weeks is the limit for a reliable model. Ideally, when these patterns are formed in the period from 1 to 4 weeks. Once the flag has continued over 12 weeks, then this model is classified as a rectangle. Streamer more than 12 weeks will turn into a symmetrical triangle. The reliability of models, which continue from 8 to 12 weeks is highly debatable.

6. Breakthrough: for bovine flag or pennant break above resistance signals that the previous increase was resumed. For the Bear flag or pennant break below support signals that the previous decline has resumed.

7. Volume: The volume must be high during the increase or decrease, which forms the flagpole. The high volume provides legitimacy for the sudden and dramatic movement, which forms the flagpole. The increase in breaking the resistance (support) gives credibility of the reliability of the formation and continuation probabilities.

8. Objectives: The length of the flagpole can be used to break the resistance or support break flag or pennant, to assess the value of a subsequent increase or decrease.
Even though the flags and pennants are the usual models, the basic principles of their identification should not be ignored. It is important that the flags and pennants are preceded by a sharp increase or decrease. No sudden movements, the reliability of the model becomes highly questionable, and the sale of this model may carry additional risks. Look for confirmation of the amount in the initial move, consolidation and renewal of the movement to improve the reliability of the identification of these models.

Schedule «Hewlett-Packard» shows an example of a model «flag», which is formed after a sharp and sudden increase.

• A sudden movement: after the consolidation of three months, «Hewlett-Packard» broken resistance at the top 28 to begin a sharp increase. Trend line is built for maximum of 5 April and 16 February, has resisted, and her breakthrough came with the increase in volume. The price has increased from 28 to 38 in less than 4 weeks. (Note: is also possible that a small pennant was formed in early May with an impedance of approximately 31).

• flagpole: the distance from the break of resistance at 28 to a maximum of 38 formed a flag flagpole.

• Flag: pricing activity took place within two parallel trend lines that are bent down.

• Duration: a maximum of 38 to break at 36, a flag, a 23-day period.

• Breakthrough: the first break above the upper trend line of the flag took place on June 21 without an increase in volume. However, the price of GEO has made up a week later and a strong closing with a higher than average (red arrows).

• Volume: to confirm the model of the volume increase in the breakthrough to form a flagpole, was quite limited during the formation of the flag and increased immediately after a subsequent break of resistance flag.

• Objectives: The length of the flagpole is 20 points and was added to break the resistance at 36 for the design objectives in the region of 46.

www.stockcharts.com

Models «triangle» Forex Market

What are the model of «triangle»?

Recognition model allows traders to observe the behavior of investors through price activity. One of the most important models, which provide profitable opportunities for trade - this triangle. Triangles are very horizontal trading patterns (or models continue) is a period during which the market takes a pause before continuing their ascending or descending trend.

Given that the current trend is stopped, the triangles in the general case can signal when the trend is going to resume. In early models, the triangle is at its widest spot. As the currency continues to be traded in the range, the model is shrinking, creating a full triangle. Once the model of «triangle» is completed, the result will often be a sharp movement in the other side, which occurred on the way out of the model.

Different types of triangles

Models «triangle» formed of upper and lower trend line is the boundary model. There are three basic types of triangles - symmetrical, ascending and descending.


The main category of models of «triangle» symmetrical triangles are formed by ascending and descending trend lines. These converging lines formed a limited range. In general, the symmetrical triangle indicates that the current trend remains in force. Therefore, the breakthrough, which occurs after the formation of a triangle, usually in the direction of the current trend. To predict when a breakthrough will occur, traders can measure the width of a formed model «triangle». When the width is narrowed down to 30-60% of the most extensive place, then, in general, is ready to be a breakthrough.

In addition to the symmetrical, triangles can also be dating back or descendants. Rising triangles can be identified on a flat top line and bottom line of a rising trend on all the higher minimums. Generally, ascending triangle signals the breakthrough to the upper side. Instead, top-down triangles include a flat bottom line and top line downward trend and signals the breakthrough of the bottom side. Timing of the possible breakthrough of triangles is performed in exactly the same as for the symmetrical triangle.

How to use the model of «triangle»

The most common trading strategy using the model of «triangle» is to establish a point of entry into the market above or below the trend line, which is the triangle. In the case of a symmetrical triangle in the current upward trend, the ideal entry point would be above the upper trend line to catch, followed after a breakthrough, the movement upwards. For the downward trend - on the contrary.

Model Select

Advisor to trade on commodity markets Lendri David is the head of the firm to manage money "Sentive Trading" and head of hedge fund "Harvest Capital Management". David Lendri has a lot of copyright trading systems, including the breakthrough 2 / 20 EMA and the method of explosion variability. His research has links to several books, such as books Connors advanced trading strategies "and" Basic Principles of computerized trading techniques for beginners. "

"Cup with handle"
A cup with handle (1) is a major turning models, which often precedes a great rally. It is formed after the instrument market sold off, to reason, and then begins to rise, creating a "cup". After the increase, the price is slightly reduced, forming a "handle" model. According to William O'Neill, who promote this model, the best candidates for the model of "cup with handle" are those who have already demonstrated a strong rally. One way to measure the "strong rally" is to use the 50-day Moving Average.

Figure 1: Model of "cup with handle. Please note that "cup" is formed at and above 50-day moving average.

While market-based instruments remain above 50-day moving average, it can be considered as being in the medium-term upward trend. Therefore, the model "cup with handle", which was formed at or above 50-day moving average, is called "escaping" as the market continues to "run away", while a model. The point of this model is that it unites the formation grounds / correction in trend. (for details, see "model" cup with handle "at number 34)

Growth Centers
As mentioned above, the 50-day Simple Moving Average provides the levels at which to look, many institutional and large traders. Jeff Cooper observed that "market-based instruments will be traded around its 50-day moving average a certain amount of time, without warning, and then break up or down. This spurt often occurs during at least several days:" (2). In line with its strategy to look for the day with the most wide range, which occurs in a market instrument that is traded at its 50-day moving average, and then try to enter the market in the direction of travel on that day.

Figure 2: Growth Centers. The plants are to enter the market in the direction of motion in the day with a wide range of 50-day moving average.

Bowl Holy Grail
In the book "Masters of Wall Street", Connors and Raška showed that the market, developing the strong trends are often restored to the moving average before the confirmation of its trend. This makes sense, since markets often commit tremor / correction, and then pushing again - like a model of rollback. In essence, the strategy is to find markets, developing a strong trend, displayed a high ADX, accompanied by the restoration of 20-periodnoy exponential moving average. They jokingly call this model "The Holy Grail Cup."

Figure 3: The Holy Grail Cup. The model seeks to capitalize on the renewal of a strong trend as shown by high values of ADX, after the restoration of the rolling average.

Breakthroughs "daylight"
Often, the markets will be traded around the moving averages. They will have a small rally (or decline) and then return to its moving average. This is known as a return to average. In the event that the market tried to escape to freedom and begins to trend of the rolling average. If you are looking for long-term systems are following the trend for commodity markets, I noticed that these trends or breakthroughs from the moving averages are often preceded by at least two days during which the minimum (for the rising trend) or maximum (for a descending trend) is not able to touch moving average. This "gap" above and below the moving average has been named as one trader "Daylight," because you can see "daylight" between the price and the bar moving average. The initial system, the breakthrough 2/20-dnevnaya EMA (3), used a 20-day exponential Moving Average and is shown below in Figure 1. As soon as a qualified signal input, a warrant for the purchase has been placed above the two-bar maximum. Short selling overturns. Installations for the model shown in figure 4 for the February 2000 Gold Comex.

Figure 1: The installation of the entrance under the 2 / 20 EMA

Figure 4: February Comex Gold.

Please note that the breakthrough 2 / 20 EMA (or breakthroughs "daylight") require that the market traded above the two-bar maximum for opening long positions and two-bar below the minimum for short positions. If the market is unable to overcome these points, it should stay out of the market. Like most systems are following the trends, breakthroughs "daylight" are prone to large recessions (losses) when the trade is simply because the markets are in a trend of approximately 30% of the time. However, when the system is used selectively (in the control of conditions), in conjunction with the management of money and / or additional technical indicators (for the definition of a strong trend), it can be a very useful tool. Also, you might consider changing the length and types of moving averages that are used depending on your style of trading. For example, short-term traders may consider using a 10-periodnoy moving average, while long-term traders may prefer the Moving Average of 50 or more periods.

Conclusion
We examined the interaction of moving average to the graphical models and examples of methods of trading based on the moving average. It should be remembered that there are different types of moving averages - simple, weighted, exponential, and a wide range of periods moving average. None of the species can not be uniquely identified better or worse. The same applies to the choice of models and methods of trade. In different circumstances, could be better, or those other methods. All depends on the type of market, trading style and personal preferences. I would recommend that you explore the different types of moving averages and the above methods. Change them by themselves or create their own methods.

Forex Magazine
based on www.hardrightedge.com

Determination Of Rupport and Resistance Points

How to accurately find the point of resistance and support?
How to accurately find the point of hesitation on the schedule?

It is very important! Almost every trading system or method of trading, at least, takes into account the key levels of support and resistance.

This method allows to determine not only the point of support and resistance, but these points are also points of hesitation.

Do you think that you know where support and resistance, but whether you know it?

How do you know where there are actually support and resistance?

The problem with the support and resistance is that they typically are not specific. This is not an exact point on the graph, where the price will go without hesitation.

In fact, the support and resistance - an area, rather than the exact number, as if we do not want.

Herein lies the problem - because we need for our calculations the exact values of the points of entry and exit. We can not enter in the area of $ 50.10/20, when using Fibonacci levels or calculate their feet and limits. We need the exact values, while the levels of support and resistance are not precise numbers.

Try to tell your broker that you want to install a stop-order somewhere between 50 and 55 and see what he will answer you.

This issue will be discussed in this article, the technique developed by the author, which is well suited not only to identify strong points of resistance and support, but also points of variation.

To find resistance and support, you must first determine the point of market fluctuations. There are various ways to do this, but here will be used by someone who himself has benefited from for many years.

Vibration top
For purposes of determining the points of fluctuations we are not interested in opening or closing of bars, but only the maximum and minimum.

Take any bar, and mark it as the start bar (S). If there are two consecutive higher maximum than that of the bar, which you noted as (S) then we are rocking up: eg bar (1) has a higher maximum than the bar (S), a bar (2) has a higher maximum than the bar (1). If there are no two higher highs than the bar (S), then you move on to the next bar, and see whether there are two consecutive higher maximum.

This may be particularly useful if the market traded sideways trend and you are trying to determine the point of breakthrough. Maybe a lot of peaks and troughs, but for us there is only one valid point - and that is the most recent fluctuation up or down.

Look at the following schedule
You can see that although there were several maxima and minima, which would you take as a support or resistance, but only in the bar (M) has identified certain point fluctuations, and you could mention a bar (K) as (S).

Fluctuation down
To determine the points of fluctuations take down any bar on the graph, and mark it as a starting point - a bar (S). If two consecutive bars make lower minimums than the previous bar, it is the fluctuation down: eg bar (1) has a lower minimum than the bar (S), a bar (2) has a lower minimum than the bar (1 ). If there are no two consecutive lower wage, then it is not a point of hesitation and you move on to the next bar. The same as in the example above, you can see the fluctuations down. Even at that price has made several maxima and minima, we have been able to bar (M) only bar (K) noted as a point (S)

Support and resistance

Once we have clearly identified points of fluctuation, we can continue to identify our points of support and resistance.
As you can see on the graph, there are marked fluctuations in all points up and down fluctuations. When we are in a descending trend, while a downward fluctuations act as resistance, and when we are in an upward trend, a fluctuation up acting as support.

While noting the points of support and resistance, the use of this method for determining the initial points of fluctuations will allow you to determine the point on the graph to calculate the stop orders, limit orders, and the design of price movement.

Mark McRee
www.daytradingcoach.com

THE CHANNEL PATTERN

Channel Patterns should generally be considered as a continuation patterns. They are indecision areas that are usually resolved in the direction of the trend. Research has shown that this is true far more often than not, of course, the trendlines run parallel in a rectangle. Supply and demand seems evenly balanced at the moment. Buyers and sellers also seem equally matched. The same 'highs' are constantly tested, as are the same 'lows'. The stock vacillates between two clearly set parameters.
While volume doesn't seem to suffer like it does in other patterns, there usually is a lessening of activity within the pattern. But like the others, volume should noticeably increase on the breakout.

HERE IS A SAMPLE CHART WITH A CHANNEL FORMATION