As I also promised, in this article we will closer get acquainted with the technical analysis of the financial markets. To crown it all told about the technical analysis in last article , I will explain that, roughly speaking, the technical analysis is an analysis of price charts (read – exchange rates).
Schedules of exchange rates
In the technical analysis different types of schedules of exchange rates are applied to the solution of different tasks. In the majority of kinds of schedules on axis X time, on axis Y – the price is counted.
Most simple, long ago all familiar, but low-informative from the point of view of the trader – the linear schedule. It is so called because dynamics of the change in price on it is displayed by means of the broken line, or (depending on scale) by a smooth curve.
The following version – the bacillary schedule. It looks here so:
This schedule of exchange rate gives a better understanding of dynamics of the prices in the market. Its feature that each time interval is displayed in the form of the vertical line with two risks at the left and on the right. The top point and the lower point of the vertical line are in points of the maximum and minimum exchange rate for the period respectively. Risk is at the level of the price of the beginning of the period, risk at the left on the right – at the level of the price of the end of the period. Thus, having looked at such schedule it is possible to see not only the average price for the period, but also its dynamics in the period.
As for the periods, usually in the analysis the following standard time intervals (periods) are applied:
- 1 minute (M1 is designated);
- 5 minutes – M5;
- 15 minutes – M15;
- 30 minutes − M30;
- 1 hour – H1;
- 4 hours – H4;
- 1 days – D1;
- 1 week – W1;
- 1 month – MN;
The interval choice for the analysis depends on what trade strategy you use. To trade, using schedules with an interval less than an hour quite risky therefore they can be applied in the advisory purposes. Professional traders usually use for the analysis time intervals of 1 days and more. Though, many successfully trade "intrady", that is "in day", thus schedules of M1 are used even.
The third kind of schedules – .
This schedule of exchange rate has much in common with the bacillary schedule. Only instead of risok at the left and on the right on graphics the rectangle which is called as "a candle body" is drawn. Vertical lines are called "shadows". Besides, if exchange rate during time decreased, that is the price of the end of the period (the closing price) is less than a price for the beginning of the period (the opening price), a body of a candle paint over, otherwise – leave not painted over. In general it not the strict rule: sometimes do on the contrary, and sometimes in case of growth of the price paint a candle green, and in case of decrease – red. Here as it is pleasant to whom. It is worth noticing that the schedule "Japanese candles" most visually reflects a picture in the market. But the beginner who came to work for Forex needs time to get used to use of such schedule of exchange rate for the analysis of a situation in the market.
Except these three main kinds of schedules there is still so-called "a tikovy schedule":
It differs from the others in that on axis X not time, and "tics", that is each change in price is counted. For example, during big activity of the markets in one second there can be some tics, and in the period of "calm" the price can remain invariable some minutes then new tics will not be drawn on graphics.
Dealt with schedules of exchange rates. Now we will consider the figures which are found on schedules.
The main figures in the technical analysis
In the previous article on InfoAdvisor.net comprising work bases on Forex it was also said that the currency market can stay in three states: the ascending trend (still tell "the increasing trend", "a bull trend"),
the descending trend ("decreasing" "bear"),
lateral trend ("lack of a trend", "a horizontal trend").
And so, on schedules certain figures sometimes appear. In relation to a trend they are divided into continuation figures (give a signal that the current trend will proceed) also by turn figures (they give a signal that the trend will change on opposite soon).
Treat figures of continuation:
Zigzag − sharp jumps in prices that up, down;
Triangle – fluctuations in the meeting canal;
The flag – has "staff" after which the prices fluctuate within narrow range.
Treat turning figures:
Double top. The essence is clear from the name and becomes clearer of drawing;
Double bottom. It is the turned analog of double top;Threefold top. It is simple to guess that it "expanded option" of double top;Threefold bottom. The turned analog of "threefold top";Head shoulders. This figure reminds a silhouette of the person. And "shoulders" as in the given drawing can be different height.
It is also the main figures which can be seen on schedules of exchange rates. Except the given figures, is, of course, and others, but they meet seldom and no big practical advantage often have.
Now, using the technical analysis, you can build the simplest forecasts of dynamics of exchange rates. Once again I will emphasize: the main thing is correct to define Forex existing in the market a trend, and then "to catch" the necessary figure which will specify, whether the price will move in the same direction or in the near future its turn will follow.
Having armed with this knowledge, we in the following article will start commission of our first transactions with foreign currency, .