Forex charts are based on market action involving price. There are five categories in Forex technical analysis theory:
Indicators (oscillators, e.g.: Relative Strength Index (RSI)
Number theory (Fibonacci numbers, Gann numbers)
Waves (Elliott wave theory)
Gaps (high-low, open-closing)
Trends (following moving average).
What's your experience what's of those technical analysis teheory you can complete rely on....
Nice start!But I think you'll find there is about 50000000 categories.
Oh....It seems now we are in campus talking about theory..what is it for..we need pips..not theory..he..he..he..
You're right but without theory we can't get those pips just kiddin
Forex Indicators Collection
Will you please if you know other categories to post here ....
I like to use elliot wave & 4 HR MACD system..
What your experience with Relative Strength Index (RSI)?
This is explanation of RSI
The RSI measures the ratio of up-moves to down-moves and normalizes the calculation so that the index is expressed in a range of 0-100. If the RSI is 70 or greater, then the instrument is assumed to be overbought (a situation in which prices have risen more than market expectations). An RSI of 30 or less is taken as a signal that the instrument may be oversold (a situation in which prices have fallen more than the market expectations).
What's your experience with Number theory
Explanation of Fibonacci numbers:
The Fibonacci number sequence (1,1,2,3,5,8,13,21,34...) is constructed by adding the first two numbers to arrive at the third. The ratio of any number to the next larger number is 62%, which is a popular Fibonacci retracement number. The inverse of 62%, which is 38%, is also used as a Fibonacci retracement number....
Explanation of Gann numbers:
W.D. Gann was a stock and a commodity trader working in the '50s who reputedly made over $50 million in the markets. He made his fortune using methods that he developed for trading instruments based on relationships between price movement and time, known as time/price equivalents. There is no easy explanation for Gann's methods, but in essence he used angles in charts to determine support and resistance areas and predict the times of future trend changes. He also used lines in charts to predict support and resistance areas
Is technical analaysis driven by self-fulfilling prophecies?
I believe all the chart patterns, candle stick patters, Fibonacci, pivot points and lagging indicators are driven by self-fulfilling prophecies.
For example, when a double-top or a head and shoulder has been formed, people instinctively feel that the price is gonna spike down because they were taught that way. So as most people sell off, demand falls and the thus the price falls.
Same goes for candle sticks, pivot points and Fibonacci.
Same goes for moving average cross over and whatnot.
The main point is we have to use what the crowd most uses and believes.
That's why I use default settings for MACD, RSI, ADX and stoch.