4. Trend, Support-Ressistance, Overbought-Oversold

4. Trend, Support-Ressistance, Overbought-Oversold

In bertradng, advantage can only be obtained when the price moves. Yes. Only when the price moves. Either he's moving up or moving down. Now the tendency of prices moving in a direction that is the trend. Trend is a useful and important part in determining your position in the trade. Due to the position in trading there are only two that buy and sell, then the trend also has only two types of uptrend and downtrend. Indonesian is yes trend up and down trend.

Let's consider the image below:

Just imagine if we did not know how to look for trends in price movements like this. When prices are in down trend you open a buy position and vice versa when the price goes up, you open a sell position. Hegh ... At least you will not be able to sleep soundly in such circumstances because of the position that stuck hehehe.

          

So determine the trend is happening is very important and you should not ignore. Ignore, then your trading will only be a gamble. Underestimate, then the market will kick you until you feel sick for days and sometimes months. Depending its social effect because you lost some money.

Most technical analysis is used to predict the trend and extent to which the trend will last.Several indicators such as Moving Average or Parabolic SAR is also used to know was where did the market is running.

However, there are circumstances where the market does not move up or down the so-called side ways. In such circumstances, opening a position to buy or sell at just spent patience that eventually erode your emotions in trading. The situation usually occurs when a side ways European or American market was closed or was waiting for big news. In such a situation is not much trade occurs causing side ways situation occurs. Well, to avoid the situation.

Support and Ressistance

Other terms you need to know is commonly called the Support and Ressistance. Now let us consider together when a trend is underway. Say an uptrend. Is there a trend that never ends? Certainly not. Each increment will reach its peak and then stop rising and continues to decline. Vice versa, when the price goes down, there will be a time where the decline stopped and the prices go up.

The points where the increases and decreases in the prices stop called point of support and ressistance. The lower limit of the price movement is sometimes referred to as the upper bound Support commonly referred to as ressistance.

Both points are very vital in your trading future. Without knowing these points then we can only follow the trend without knowing that the actual age of the trend is no longer going to be replaced by the opposite trend or side ways situation.

There are many ways to determine a point of support and ressitance. Some traders use indicators to find out. Others use the Fibonacci sequence while the other uses the past history of price movements. I myself do not want to be too dizzy to calculate support ressistance using complex calculations. For me it is complicated enough forex analysis and complex psychology therein. So, why do not we simplify it? Sometimes simple is better.

The easiest way to determine support and ressistance is to determine the lowest and highest price movements in previous days at a certain period, such as one month.Consider the following chart:

The graph above is a graph for GBPUSD on January 14, 2011 with a period of 1 hour.Note that the price goes up, but not beyond the area that has been marked with a blue stripe. When the price moves up to near 1.5885 then as if the price of losing its ability to move up again past that point and vice versa when he moves down, the price can not penetrate the 1.5575 which is the limit terrendahnya. It was called a point of 1.5885 and 1.5575 with ressistance called support.

The second point is actually a reflection of psychological point recognized by market participants simultaneously. As we all know that basically the price movements are determined by law demman and supply (demand and supply). When demand is rising while supply remains the currency will be strengthened, and vice versa when it deals a lot and demand remains the currency will be weakened due to the amount of supply in the market.

Now in a state of price uptrend for example, it will psychologically cause tergulirnya large snowballs and mutually reinforcing. When prices started to creep up then the trader will usually follow the trend that is going on and take a buy position of obstruction. This has led to rising demand that boosted prices continue to rise.

But on the other side of the majority of traders are also anticipating the end of the trend by taking a certain ressistance point. At that point they no longer take action to buy otherwise they will took profit by selling the currency they have purchased before. Well if everybody does so automatically reduced demand and the rise of the currency began to lose strength. As a result, the price back down.

So the key here is how to determine the point of support and ressistance same point collectively support ressistance market. If we know these points, the trading will be much easier.

And now comes a new question in our minds: Could ressitance point of support and can be penetrated by the price movement? The answer is maybe. It can be tough but it is possible in any.

In circumstances where the buyer and seller win less, of course, prices may continue to rise even though the back has reached the point ressistancenya. In such circumstances, the actual sound of the point of support and ressistance on the market is not uniform and is divided into several groups. One group estimates that the price will not go up until a certain level while the other group believes prices may rise melewari level determined first group. If the second group win, of course, support or ressistance will break.

What will happen when the point of the res soup and impenetrable? The answer is that it will form the point of support and ressistance new. Ressistance pierced point will be the point of support while ressistance point will be re-formed. Consider the following picture:

This is the GBPUSD chart using 1-hour time frame. Visible in the area yangi given circle marks, the price cut through point ressistancenya. As a result, the price moves further away from the ressistance point to form a new ressistance point on the horizontal line of the most atas.Titik ressistance that had been broken now changed into a new point of support and now the price is moving in a new rangenya.

Now the next question that remains is how to know that the price will break point ressistance support her or not. Hahaha, if you get here you have to learn some instruments, especially the type of technical analysis oscillator for menegetahui point overbought or saturated selling. It should also be borne in mind that the fundamental situation occurs. Not easy indeed. Most of the points critical to know whether or not translucency soup and res of experience after years of trading. Yes I really. So it must be recognized that experience is important.

Ok kids up here teaching us soup and res. Easy enough right? (Did I hear anyone exclaim: "Yes, teacher bu ...")

Overbought and Oversold

Ok we enter the next point of technical analysis is a term named as overbought and oversold (overbought-oversold or commonly abbreviated as OB and OS just let me not tired of writing). OB and OS is a situation where prices can no longer continue the trend because it was too expensive or too cheap price so that trends can no longer continue. In contrast to the soup and res is a psychological level that is essentially a mutual agreement is not officially among fellow traders, OB and OS itself is a normal state and a real place in the market (not simply a psychological case).

Supposing a rising trend is happening, then in this state the currency becomes more expensive than usual. If we find a chart of GBPUSD was an uphill climb for example, it means that the GBP is being increasingly expensive value than the USD. Market participants continuously hunt GBP due to expected prices will continue rising, and they still have sufficient capital to carry out acts of purchasing.

However, there will be a point where buyers no longer possible to buy the GBP because the price was too expensive. Not only cases buyer's opinion that the price is too expensive, but more than that is their capital could no longer sufficient to buy the GBP in a certain amount. Now this is called the state of overbought or OB point.

Conversely when the downtrend is going, there will be a point where prices will stop down because the price was too cheap so the seller no longer possible to sell the currency or they would lose. This is called oversold OS.

In the circumstances the price reaches a point OB or OS it is expected that the price will reverse direction and the trend will soon stop. So when moving up and OB point has been reached, then the price will go up trend will be stopped and replaced with a decline in the currency moves. Vice versa when the price goes down and then entered the area of ​​the OS, then the price will move back up and the down trend stopped.

Often OB and OS also occur at points Sup and Res because indeed they are of the same nature which point a counter trend. But not always. Of course, buy and sell decisions would be support at all if prices are not on these extreme points.

Now the question is how to determine the point of OB and OS? The easiest way is to use a type indicators such as RSI or Stochastic Oscillator. These indicators are designed to determine the points OB and OS.

Let's use an example of indicators: ie Stcohastic Oscillator. In Stocastic, OB area occurs when Stochastic is at levels above 80 and OS occurs when Stochastic is at levels below 20. note the following images:

Areas shaded area colored birumerupakan overbought and oversold. You can see it on a rectangular blue one I described. When prices go down, and then touch the saturated area selling then the price back to move up because the price was too cheap to be sold by the seller. The same situation is also happening in the overbought area.

Regarding the use of this more detailed Stochastic we will discuss in the next session of technical analysis. Please be patient.

Now with regard we can estimate When does a trend ended and replaced with the next trend. Thus we can adjust the timing of the opening of positions to be better again.

 

See you at the next lesson.

3. Reading Candlestick

3. Reading Candlestick
Note the picture below. This is called "Candlestick Chart" because of its shape is like a candle. This graph is taken from Netdania (www.netdania.com), a provider of realtime chart for forex. In addition there are many providers Netdania other charts that can be accessed for free without paying a dime. Each provider has a chart and it looks different from each other. Not a problem according Belajarforex because if we can use a single platform should also chart other platforms requiring only minor adjustments.
This graph was made in the 17th century by the people of Japan that was originally used to monitor price movements on commodity products. Steven Nison is known as the first to popularize this model chart. Very representative because it consists of High, Low, Open and Closing Price makes the most popular chart used by forex analysts. If you are unfamiliar with security products, this graph is never used to monitor the price. Why?Simple, requiring only the price of the securities closing price just is not like in forex trading.Actually there are more types of charts such as bar charts, dot charts, line charts, and more. But the candlestick is more widely used by traders because it looks easy to read alias representative.

Pictured above is a graph of the exchange rate of EUR / USD. If you see a dotted blue line on top of it is the last price on the value of EUR / USD is at 2.0052 means that the EUR price of USD 2.0052 (remember how to read a quote that is never explained in the previous module). See also the small print at the top left that says "M15 = minutes 15. That means one candle (one bar) represents the price movement for fifteen (15) minutes.Candlestick interpretation based "pattern" that is. Candle is green means the price goes up or closing price of greater value than the opening price. Instead, a red candle means the price goes down or clsoing price lower in value than the opening price. Then what vertical lines above and below the candle that? That is the highest price and lowest price during the given period. In the example above is the lowest and highest price for each hour for the period used is per-hour.
If using the term Bullish and Bearish then the green is a bullish pattern and the red ones are Bearish pattern. For more details see the image below:

Do not be surprised if you see a different color for the second price above eg blue with red. Not a problem, depending on each provider in providing the color chart.Now consider the image below:
This is a candlestick for the GBP / USD 1h chart using the period (ie 1 Candlestick represents the movement for 1 hour). Axis "X" in particular the part that I put a red box is a clock movement that was about to be discussed. The clock showed 09.00 and 10.00, which means Candlestick thereon represent movement from 9:00 until 10:00, the images shown by the red candlestick. Here's how to read it: At 09:00 price opened at 1.9987 and then at 10:00 the price closed at 1.9970.
Then followed by the next green candle from 10.00 to 11.00, the price opened at 1.9971 and then closed at 1.9974 at 11:00, so forth and continue to other candle.
Now the question arises, whether the opening price must be equal in value to the closing price on the previous candle? No. Not necessarily, and indeed it often happens that the opening price is different from the closing price on the previous day. This often occurs when passing days off (Saturday and Sunday) is if there are special events. Inequalities are usually called "gap." Gap is often used by technical analysts to predict prices.
For more details see the image below:
The discussion of the gap will be separated from this article because it offended the technical analysis and quite spacious. For the time being it is enough for us to be able to read candlestick before knowing technical analysis. Do not forget to read other articles on this website to deepen your analysis capabilities.Well, now you already know the key to forex charts reading was at least able to feel the direction of price movement. Perhaps you're thinking: "Gotcha! Finally I was able to open a real account! Woo hoo ... "
Wait a minute. Can not read it yet can certainly benefit. Continue your forex school to complete before you decide to open a real account. See you at the next class.
We will begin studying technical analysis! Yippee. Prepare your brain men!

2. Types of Forex Charts

2. Types of Forex Charts

Due to your daily forex trading future will not escape from the graph, the master chart and understand how the reading of the graph is the thing that should not be ignored. Forex trading without being able to read charts? That is tantamount to run the vehicle without a steering wheel! So enough gas and brake only and we see how it goes.

There are various types of charts commonly used when you trade forex. However, generally speaking forex chart consists of several types:

line Chart

dot Chart 

bar Chart

candlestick Chart

Here is a picture of each chart for GBPUSD currency:

 

For graphics, we will use an online chart of Netdania (www.netdania.com) in the sample and the image display. You can see the chart above on the following link: http://www.netdania.com/ChartApplet.asp

If the first days of school we are familiar Bar Chart and Line Chart, and candlestick dot may sound familiar to you. The bad news, you'll use throughout this school Candlestick.The good news, it is not difficult to learn.

There are also some other custom graphics which is rarely used by novice traders.Several types of graphs designed to predict the boundaries of price movement (support and ressistance) and others are used to simplify the movement of certain currency fluctuations. Do not worry, even without mempelajadi science chart like that even you can make a profit on forex trading. Sooner or later you will later learn that the greatest determinant of profit is on the mental attitude that is ready and discipline.

The bar chart is more often used by American traders in analyzing currency movements.While Asian and European traders often use Candlestick in technical analysis. For Dot Chart Line Chart and its use is limited to a particular environment. This is due informai submitted on line charts and dot charts are not as complete as Candlestick and Bar Chart.

Candlestick itself other than to inform the price movement at certain hours, the reading is much easier due to add color-chart graph. Thus you no longer need to distinguish whether the chart is being analyzed is a graph chart up or down.

The next lesson we will learn how to read this Candlestick. A chart that was not known in the everyday world but very common in Forex.

1. Introduction to Technical Analysis

1. Introduction to Technical Analysis
Let's start with the underlying assumption of technical analysis. In this case I would take an extreme approach so that you can understand how a technical analysis used in obtaining the gain on forex trading. Of course, in practice it is not so. You can combine both analysis (fundamental and technical) in order to obtain a trading system that works best for you.
The chartist (parties who perform technical analysis), believe that they can know the patterns of movement of exchange rates in the future based on the observation of exchange rate movements in the past. In short, they hold this jargon: "History always repeats it self." This philosophy is of course contrary to the fundamentalists where investment decisions on the value of a currency based on economic fundamentals, monetary policy and the country concerned.

   The main weapon is the technical analyst charts (chart - that is why they are called chartist). Through this chart they can see the ongoing trend, the span of the trend, the volume of transactions and psychological levels that exist. If you have been able to know these 4 things, of course, a great advantage will soon be flowing into your pocket. Let me re:
1. Trend Ongoing
2. Volume of transactions
3. Levels of psychological (support and resistance)
4. The time periods occur.
Yup, that's it. Indeed, the aim of the chartist is predicted to four things. But now the question is how accurate our ability to predict the price? Well that's what had to be constantly on the grindstone every day. No single method is perfect both fundamental and technical. Experience and yourself holding a central role here.

Technical analysis itself has some basic analysis section or different. Broadly speaking, the technical analysis is divided into several large branches, namely:

alt
Does technical analysis have weaknesses ?? Of course. As I said just now, no one is perfect. Let me sarikan second weakness of this analysis in tabular form:

Weakness in Fundamental Analysis

It takes time to obtain the information.

Often it is subjective because it involves a lot of opinions.

Fits better with the long term trading period.

Difficult to apply in inefficient market.

Weakness in Technical Analysis
It requires a lot of data to support accurate prediction.
Highly dependent on the ability chartist. Each chartist have different methods and each is not necessarily suitable to one another.

Well that's it for the introductions on technical analysis. In the next section we are directly acquainted with the chart. You definitely do not want too much information that eventually even make you dizzy is not it?

Intermediete

First of course we have to congratulate you. Through perseverance you successfully completed the Beginner class that might seem boring. But believe that the class is boring it's very important as a basic knowledge of forex you later. The good news we promise not to give more material that is not practical, but from now on we will learn practical and you can use in your trading future. Is not that great?
A boy once asked his father: "Well why I often fall when I run?"
His father was a wise saying: "Son, those who had fallen while running will get a valuable lesson to be run later."
Now about that picture of you who just want to start classes Intermediete. The good news is you will begin to learn to walk. The bad news is you may be more frequent falls. If it just sits will never fall instead? But do not worry, with some falls (loss) we will study well to be run later. And good, your loss only occurs in the demo account. Tomorrow when you want to run using a real account, maybe you've been studying what it means loss so that it became the capital not to fall off again in a real account.
Intermediete In class you will learn some of the technical issues and of course a variety of other basic technical analysis. You will also begin to be introduced some forex terms that are important to you such as the Support-ressitance, Over and Over Sold Bought and other technical matters. But of course the first thing to be learned is about how to read forex charts.
Our advice is do not disconnect your Forex School until selesar. Even after you complete the class Intermediete, you must keep melajutkannya to a higher level, namely Advance. In Intermediete You are also expected to begin to diligently use your forex demo account. If you do not already have one, you must register and have it! It is incumbent on you as a student in our Forex School. Otherwise, you will hmm we spend with no respect! Ha ha ha, just kidding anyway. Anyway where we may prohibit you read our article? But trust me, it's important demo account.
Learn Forex cooperate with Metaquotes to provide training forex demo account for you.Please register yourself. Click the banner below to get it. After that, I'll see you at the next class. Oh yes, and do not try real trading before you complete at least Advance class.