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Reading Forex Chart Patterns Part 3 

www.sm-forex.com
This is part 3 of my series in how to read a forex chart and recognise chart patterns. Included here are moving averages, continuation patterns, reversal patterns and MACD.

 

 
 
Tags:  forex charts  reading charts  forex strategies  moving average  chart pattern  trendline  candlesticks 
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Published:  February 01, 2012
 
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Slide 1: Reading Charts 3 “IT’S TIME TO GET MORE OUT OF LIFE” www.sm-forex.com Copyright © 2007 Forex Education Ltd
Slide 2: The Forex Codes Moving Averages – Shows the trend in a smoothed fashion – Used as moving levels of Support and Resistance – No good in sideways, tight-ranging markets – It is a “lagging” indicator. It follows price action Copyright © 2007 Forex Education Ltd
Slide 3: The Forex Codes Moving Averages Copyright © 2007 Forex Education Ltd
Slide 4: The Forex Codes Moving Averages • 1. 2. 3. 4. On all our charts we use: 10 DAY EMA 200 period EMA/SMA 5 WMA One or more other EMAs depending upon timeframe used Copyright © 2007 Forex Education Ltd
Slide 5: The Forex Codes Moving Averages Copyright © 2007 Forex Education Ltd
Slide 6: The Forex Codes Moving Averages Copyright © 2007 Forex Education Ltd
Slide 7: The Forex Codes – Chart Pattern • Chart Pattern is one KEY to trading success • It is a Market “Fingerprint” or “CODE” • Use only the most basic and obvious chart patterns just like the Pros do! • Others will have spotted them hence more probability of success Copyright © 2007 Forex Education Ltd
Slide 8: The Forex Codes Continuation Patterns • These occur when the prevailing trend pauses • The next move usually in the same direction as the Trend • Higher the timeframe the more powerful the pattern • There are always exceptions Copyright © 2007 Forex Education Ltd
Slide 9: The Forex Codes Flags and Pennants • Very powerful patterns to trade. Very reliable. • Brief pauses in a dynamic market move • Must be preceded with a sharp and almost straight line move • After the pause the trend resumes on a burst of trading activity Copyright © 2007 Forex Education Ltd 9
Slide 10: The Forex Codes Flags and Pennants Copyright © 2007 Forex Education Ltd
Slide 11: The Forex Codes Flags and Pennants Copyright © 2007 Forex Education Ltd
Slide 12: The Forex Codes Flags and Pennants Copyright © 2007 Forex Education Ltd
Slide 13: The Forex Codes Reversal Patterns • Higher the timeframe the more powerful the pattern • Can be more risky because you are going against the trend • Must have a prior trend • It may only be a short-term reversal of trend • First sign may be the breaking of an important trendline Copyright © 2007 Forex Education Ltd
Slide 14: Reversal Patterns - Double Tops The Forex Codes • Very frequent and easily recognised • Top is often referred to as an “M” • Ideal DT has two prominent peaks at about the same price level • It is a bearish pattern at the top of an uptrend • Good for bounce trading off a high Copyright © 2007 Forex Education Ltd 14
Slide 15: Reversal Patterns - Double Tops The Forex Codes Copyright © 2007 Forex Education Ltd
Slide 16: Reversal Patterns - Double Tops The Forex Codes Copyright © 2007 Forex Education Ltd
Slide 17: Reversal Patterns - Double Tops The Forex Codes Copyright © 2007 Forex Education Ltd
Slide 18: Reversal Patterns - Double Bottoms The Forex Codes • Very frequent and easily recognised • Top is often referred to as an “W” • Ideal DB has two prominent troughs at about the same price level • It is a bullish pattern • Good for bounce trading off a low Copyright © 2007 Forex Education Ltd 18
Slide 19: Reversal Patterns - Double Bottoms The Forex Codes Copyright © 2007 Forex Education Ltd
Slide 20: Reversal Patterns - Double Bottoms The Forex Codes Copyright © 2007 Forex Education Ltd
Slide 21: Reversal Patterns – Where Could a Reversal Occur The Forex Codes • At a Key “Cluster” Level • At a Pivot Level • At a break of solid Trendline • At a Fibonacci level • At strong Support or Resistance • With MACD Divergence Copyright © 2007 Forex Education Ltd 21
Slide 22: The Forex Codes Reversal Patterns – MACD • MACD is a simple momentum indicator • Can help us spot trend reversals • I use it for spotting “Divergence” only • Must be used in combination with other tools and never on its own Copyright © 2007 Forex Education Ltd
Slide 23: The Forex Codes Reversal Patterns – MACD Copyright © 2007 Forex Education Ltd
Slide 24: The Forex Codes Reversal Patterns – MACD Copyright © 2007 Forex Education Ltd
Slide 25: The Forex Codes Reversal Patterns – MACD Copyright © 2007 Forex Education Ltd
Slide 26: The Forex Codes Reversal Patterns – MACD Copyright © 2007 Forex Education Ltd
Slide 27: The Forex Codes Copyright © 2007 Forex Education Ltd
Slide 28: Reading Charts 3 “IT’S TIME TO GET MORE OUT OF LIFE” www.sm-forex.com Copyright © 2007 Forex Education Ltd

   
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