reading forex chart patterns part 2

“IT’S TIME TO GET MORE OUT OF LIFE”

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Reading Charts 2

The Forex Codes Japanese Candlesticks (intro)

• The Japanese began using technical analysis to trade rice in the 17th century. Candlestick charting first appeared sometime after 1850

• Long bodies indicate strong buying or selling and a faster move. The faster buying or selling activity occurs, the longer the body becomes.

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The Forex Codes Japanese Candlesticks

• Useful for identifying Reversals

• Good “tool in the box” for Bounce trading

• Not to be used as a stand alone indicator

• Psychological depiction of trader mentality at the time

The Forex Codes Japanese Candles – Hanging Man

The Forex Codes Japanese Candles – Hammer

The Forex Codes Japanese Candles – Inverted Hammer

The Forex Codes Japanese Candles – Railroad Tracks

• Railroad Tracks are one of the strongest patterns there is

• A trend comes to a halt with a tall bar with long real body and little or no shadow and is followed by a similar tall bar going the other way

• This pattern shows many traders feel the market should reverse

The Forex Codes Japanese Candles – Doji

• A Doji indicates indecision in the market and struggle between bulls and bears

• Open and close prices are the same or nearly the same

• Four main types Of Doji

The Forex Codes Japanese Candles – Tweezer Tops

The Forex Codes Japanese Candles – Tweezer Bottoms

The Forex Codes Japanese Candles – Spinning Tops

• When a trend is running out of momentum, its exhaustion is shown by short real body candles

• In a “Spinning Top” price opens and closes near to the middle of the candle leaving little real body

• The shadows on these candles can be quite long and about the same length

The Forex Codes Trendlines

• A trendline is a good way to show S and R

• Price action can only do one of two things:

1. It can break through the trendline

2. It can bounce off the trendline

The Forex Codes Channels

• Parallel Support and Resistance Trendlines with the price action enclosed

• It is possible to trade bounces within the channel or breakouts out of the channel

• Pick simple formations – be obvious

• VERY POWERFUL for trading

“IT’S TIME TO GET MORE OUT OF LIFE”

www.sm-forex.com

Reading Charts 2

reading forex chart patterns part 2

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