Technical Analysis Articles
10/05/2009
A Lesson in Drawing and Using Trendlines
When I began my career as an analyst, I was lucky enough to have some time with a few old pros. One in particular that I will always remember told me that a kid with a ruler could make a million dollars in the markets. He was talking about trendlines.
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Technical Analysis Articles
04/21/2008
Weekly Trading Lesson: Don't Change Time Frames To Stay In A Losing Trade
Too many times I hear about new traders opening a trade using the 5-minute chart (not my favorite approach) and when the market moves against them, they move to the 15-minute chart to justify staying in a little longer, hoping that the market will turn around. Then if the market
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Technical Analysis Articles
04/08/2008
Weekly Trading Lesson: Bollinger Bands
One of the more popular technical indicators in use today is Bollinger Bands. Created by John Bollinger in the early 1980s, this tool is essentially a Moving Average with a volatility filter. Volatility can be of great value in an indicator for those times when the market is swinging wildly
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Technical Analysis Articles
03/24/2008
What Is The Average Directional Index (ADX)?
You see that the EUR/USD was moving up strongly, so you bought this pair on the last pullback. But now after another move up, the pair has pulled off of the highs and is moving down and you wonder if there is a way to measure the strength of the
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Technical Analysis Articles
11/28/2007
Overbought and Oversold RSI Readings
When is an overbought RSI reading bullish and when is it bearish? One classic interpretation of momentum indicators is that of overbought and oversold. Normally these are quite good signals when used within a consolidating market although mere oversold or overbought readings should not be used to buy or sell
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Technical Analysis Articles
11/11/2007
How to Trade Both Trend and Range Markets by Single Strategy?
Seven years ago when I was about to finish a long time study on how to understand the real meanings of economic concepts and in a shiny day when apparently everything did worked out well I found myself a leading scientist of economics, someone who will be rich in
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Technical Analysis Articles
11/02/2007
"Vibrating Prices" and the Trading Philosophies of W.D. Gann
William Delbert (W.D.) Gann is regarded as one of the pioneers of technical analysis and market behavior. He wrote several books on stock and commodity trading and developed the well-known "Gann angles" and "Gann Fans." Gann was born on a farm near Lufkin, Texas, in 1878. His rise to trading
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Technical Analysis Articles
10/23/2007
Cycles - How Do They Work?
Regular readers of my reports will probably recognize that I use cycle analysis when trying to work out which direction a currency pair will be moving and when this direction is likely to reverse. So what do these look like and how do they work? The following chart shows the
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Technical Analysis Articles
10/19/2007
"Triple Moving Averages" Explained
Those who have followed my work for some time know that I take a "toolbox" approach to analyzing and trading markets. The more technical and analytical tools I have in my trading toolbox at my disposal, the better my chances for success in trading. One of my favorite "secondary" trading
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Technical Analysis Articles
10/12/2007
The Importance of Basic Trading Tools - Like the Venerable Trend Line
In some of the educational stories I have written, I discussed my "primary" trading tools and my "secondary" trading tools. I also mentioned that the more tools one has in his or her "Trading Toolbox," the better the odds for trading success. In this educational feature, I want to focus
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Technical Analysis Articles
10/05/2007
What Do They Mean by Overbought and Oversold?
Many times in trading we here the terms overbought and oversold. We hear an analyst state that the EUR/USD is overbought and due for a correction or that the USD/CAD is oversold and due for a bounce. But how does one determine what is overbought and what is oversold and
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Technical Analysis Articles
09/28/2007
Fast Stochastics or Slow Stochastics?
New traders typically want to know the difference between Fast Stochastics and Slow Stochastics. They also want to know whether the typical default settings of 5,5 (for Fast Stochastics) or 5,5,5 (for Slow Stochastics) as seen in most charting packages developed for FX are better or worse than the typical
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Technical Analysis Articles
09/20/2007
Using a Moving Average with RSI: Another way to create a signal from RSI
Have you ever been frustrated with RSI? How many times does it fail to reach those overbought and oversold areas? When it does, quite often price just continues. Well, there is another technique, not very exact but can be useful. It is possible to draw a trend line on RSI.
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Technical Analysis Articles
08/29/2007
Trend lines - Aren't they things you draw on price charts?
Well, yes they are but that doesn't mean you can't use them in other areas also
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Technical Analysis Articles
08/27/2007
What is MACD Divergence?
In my opinion, one of the strongest signals generated by technical indicators is MACD divergence on a daily chart. MACD stands for Moving Average Convergence/Divergence and can be quite useful for giving hints of a possible market reversal.
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Technical Analysis Articles
08/24/2007
Using Larry Williams' Percent Range Indicator in Your Trading
The Percent Range (%R) technical indicator was developed by well-known futures author and trader Larry Williams. This system attempts to measure overbought and oversold market conditions. The %R always falls between a value of 100 and 0. There are two horizontal lines in the study that represent the 20% and
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Technical Analysis Articles
08/17/2007
The MACD Indicator: A Great Secondary Tool
The Moving Average Convergence Divergence (MACD) indicator has the past few years become one of the more popular computer-generated technical indicators. The MACD, developed by Gerald Appel, is both a trend follower and a market momentum indicator (an oscillator). The MACD is the difference between a fast exponential moving average
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Technical Analysis Articles
08/14/2007
Riding the Third Wave - A Closer look at Elliott Analysis
Traders can use Elliott Waves even without using all the intricacies of this complex analysis method. They can use the clear and rich signals of all waves at macro scale. And they can use wave 3 as a standalone trend, to which they apply standard trend analysis
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Technical Analysis Articles
08/14/2007
The Use of Moving Averages
Moving Averages may be the most popular technical indicator because they are easy to understand. After all, a 10-day Simple Moving Average is calculated by just taking the closing prices of the last 10 days, adding them together and dividing by 10.
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Technical Analysis Articles
07/20/2007
Identifying Overbought and Oversold Markets using The Keltner Channel
The Keltner Channel was developed by Chester Keltner back in the early 1960s. He is a well-known commodity trader, especially grains. It is a volatility-based indicator that makes use of the "envelope theory." Moving average bands (or channels), like the Keltner Channel, fall into the general category of envelopes. These
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