Experienced traders recognize that in a majority of cases where there are strong trends and directional movements dominating the price action, it is still possible to examine the markets in the context of a longer term range established in a longer time frame. Prices develop as fractals, so it is most often the case that trends, ranges, consolidation or continuation patterns exist at multiple levels on the charts at different time periods.
One interesting result of this phenomenon is that it is always possible to apply a large number of techniques simultaneously to the price, even if they appear to preclude and contradict each other at first glance. Thus, in this article, we'll take a look at such consolidation patterns that arise at multiple levels on an chart, and you can deepen your forex education in this field by seeking more comprehensive sources afterwards.
Triangles Triangles are the least reliable, and common type of consolidation patterns observed in forex. This pattern is found frequently at periods leading to major announcements, such as the released of important statistical data, a press conference, a central bank statement, or an earnings release. The symmetrical triangle is often thought to be the least predictable of the formations, and its breakdown can result in a movement in any direction. The rising and descending triangles, on the other hand, are classified according to their slopes, and are considered to be easier to evaluate. Still, it is in general the case that none of the triangle formations constitutes a reliable consolidation pattern by itself.
Flags Flags are common, but they are also regarded to be highly reliable as consolidation patterns. They arise commonly during the development of a trend, and represent the phase during which traders refine their analysis, and calm down, preparing for the next leg. The formation itself resembles a rectangle or a parallelogram, hence the name. It is more reliable then a triangle, and signals a phase where the trend has slowed down to such an extent that an interested trader can join it at minimal cost.
Pennant Pennants can be characterized as micro-triangles. They are formed and liquidated very fast in trends characterized by very sharp movements and whipsaws. They are the most reliable of consolidation patterns, however, they are not easy to exploit since their life time is so small.
All these patterns are common on the charts, but the manner in which they can be exploited, and the degree to which they present reliable opportunities will depend on the trading style of and software of the trader. It is perhaps easiest to exploit a pennant with an automated system. Flags can be exploited easily by long-term traders, and triangles are most useful in the period leading to a major release where the pattern can be interpreted with greater confidence. In general, all the common rules of trading are valid while making use of the consolidation patterns. Study the patterns in a variety of contexts, be patient and selective in how you trade them, and you will derive the greatest benefit from these patterns.
One interesting result of this phenomenon is that it is always possible to apply a large number of techniques simultaneously to the price, even if they appear to preclude and contradict each other at first glance. Thus, in this article, we'll take a look at such consolidation patterns that arise at multiple levels on an chart, and you can deepen your forex education in this field by seeking more comprehensive sources afterwards.
Triangles Triangles are the least reliable, and common type of consolidation patterns observed in forex. This pattern is found frequently at periods leading to major announcements, such as the released of important statistical data, a press conference, a central bank statement, or an earnings release. The symmetrical triangle is often thought to be the least predictable of the formations, and its breakdown can result in a movement in any direction. The rising and descending triangles, on the other hand, are classified according to their slopes, and are considered to be easier to evaluate. Still, it is in general the case that none of the triangle formations constitutes a reliable consolidation pattern by itself.
Flags Flags are common, but they are also regarded to be highly reliable as consolidation patterns. They arise commonly during the development of a trend, and represent the phase during which traders refine their analysis, and calm down, preparing for the next leg. The formation itself resembles a rectangle or a parallelogram, hence the name. It is more reliable then a triangle, and signals a phase where the trend has slowed down to such an extent that an interested trader can join it at minimal cost.
Pennant Pennants can be characterized as micro-triangles. They are formed and liquidated very fast in trends characterized by very sharp movements and whipsaws. They are the most reliable of consolidation patterns, however, they are not easy to exploit since their life time is so small.
All these patterns are common on the charts, but the manner in which they can be exploited, and the degree to which they present reliable opportunities will depend on the trading style of and software of the trader. It is perhaps easiest to exploit a pennant with an automated system. Flags can be exploited easily by long-term traders, and triangles are most useful in the period leading to a major release where the pattern can be interpreted with greater confidence. In general, all the common rules of trading are valid while making use of the consolidation patterns. Study the patterns in a variety of contexts, be patient and selective in how you trade them, and you will derive the greatest benefit from these patterns.
About the Author:
Todo sobre Juegos.com para gente que le gusta jugar Encontrar un Trabajo Empleo es fcil si sabe dnde buscar
RSS Feed (xml)
No comments:
Post a Comment