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FOREX Technical Analysis

FOREX Technical Analysis (18)

The Wave PatternElliott's main discovery was that market behavior could be identified and measured through a repeating eight wave sequence, consisting of 5 waves that he called "impulsive," followed by a 3-wave "corrective" sequence.  Impulse waves are labeled numerically 1 through 5, corrective waves are labeled A, B and C, as per the following example:
Of the many market sayings thrown around by traders, perhaps none is more overused and less understood than the old adage 'the trend is your friend'. All too often, the phrase is used after a trader has taken a counter-trend position and subsequently been stopped out at a loss. Remorse sets in at this point and most traders kick themselves not only for having lost on a counter-trend trade, but also for not having caught the latest move in the trend itself.
Introduction This is a guide that tells you, in simple understandable language, how to choose the right charts, read them correctly, and act effectively in the market from what you see on them. Probably most of you have taken a course or studied the use of charts in the past. This should add to that knowledge.
John Murphy, is a very popular author, columnist, and speaker on the subject of Technical Analysis. John's "Ten Laws of Technical Trading" is the best guide available anywhere for people who are new to the field of charting. I urge you to print out this page and refer to it often. If you find this information useful, consider subscribing to John's Market Message Service.
At one of the trading classes I conducted back in 1997 in North Hollywood, I was demonstrating the use of ratios to discover support and resistance price zones via a chart projected on the screen. After having completed several support and resistance lines, one student in the back of the room made an observation not unlike that of others before him. “There are lines everywhere! How can this be useful? How can we know which one is going to contain price on any given move?”
Examples of U.S. economic indicators that are clearly tradable, resulting in immediate price adjustment and trading position profits:
Having a map on our time frame helps us see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day.
Fibonacci numbers are a sequence of numbers in which each successive number is the sum of the two previous numbers: 1, 1, 2, 3,5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, etc. These numbers possess an intriguing number of interrelationships, such as the fact that any given number is approximately 1.618 times the preceding number and any given number is approximately 0.618 times the following number.
It is said that “the trend is your friend” in numerous articles and books on the subject of trading. For the most part, this is absolutely correct. However, even the trend can fail to be your friend if you do not realize when it has likely come to an end.
Technical analysis prior to high-speed computers essentially meant charts and moving averages. The computers ability to crunch numbers has expanded the definition of technical analysis to mean any method of determining future price movement that exclusively uses past price movement as its basis.
W. D. Gann once wrote on several occasions to only enter a position on "indications of change in trend." What exactly is an 'indication of change of trend'? Can this be determined 'exactly', or is it a matter of probability?
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Which is your favorite Technical Indicator?