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MetaQuotes Software Corp.
MetaQuotes Software Corp.  

New article Technical Analysis: How Do We Analyze? is published:

This article briefly describes the author's opinion on redrawing indicators, multi-timeframe indicators and displaying of quotes with Japanese candlesticks. The article contain no programming specifics and is of a general character.

Author: Victor

Sergey Golubev
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Press review

newdigital, 2014.02.13 15:46

3 Types of Forex Analysis (based on dailyfx article)


Forex fundamental centers mostly around the currency’s interest rate. Other fundamental factors are included such as Gross Domestic Product, inflation, manufacturing, economic growth activity. However, whether those other fundamental releases are good or bad is of less importance than how those releases affect that country’s interest rate.

As you review the fundamental releases, keep in mind how it might affect the future movement of the interest rates. When investors are in a risk seeking mode, money follows yield and higher rates could mean more investment. When investors are in a risk adverse mentality, then money leaves yield for safe haven currencies.


Forex technical analysis involves looking at patterns in price history to determine the higher probability time and place to enter and exit a trade. As a result, forex technical analysis is one of the most widely used types of analysis.
Since FX is one of the largest and most liquid markets, the movements on a chart from the price action generally gives clues about hidden levels of supply and demand. Other patterned behavior such as which currencies are trending the strongest can be obtained by reviewing the price chart.

Other technical studies can be conducted through the use of indicators. Many traders prefer using indicators because the signals are easy to read and it makes forex trading simple.


Forex sentiment is another widely popular form of analysis. When you see sentiment overwhelmingly positioned to one direction that means the vast majority of traders are already committed to that position.

Since we know there is a large pool of traders who have already BOUGHT, then these buyers become a future supply of sellers. We know that because eventually, they are going to want to close out the trade. That makes the EUR to USD vulnerable to a sharp pull back if these buyers turn around and sell to close out there trades.

Sergey Golubev
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Press review

newdigital, 2014.02.15 06:58

Trader Styles and Flavors (based on dailyfx article)

Technical vs. Fundamental

Technical analysis is the art of studying past price behavior and attempting to anticipate price moves in the future. These are traders that focus solely on price charts and often times incorporate indicators and tools to assist them. They look at price action, support and resistance levels, and chart patterns to create trading strategies that hopefully will turn a profit.

Fundamental analysis looks at the underlying economic conditions of each currency. Traders will turn to the Economic Calendar and Central Bank Announcements. They attempt to predict where price might be headed based on interest rates, jobless claims, treasury yields and more. This can be done by looking at patterns in past economic news releases or by understanding a country’s economic situation.

Short-Term vs. Medium-Term vs. Long-Term

Deciding what time frame we should use is mostly decided by how much time you have to devote to the market on a day-to-day basis. The more time you have each day to trade, the smaller the time frame you could trade, but the choice is ultimately yours.

Short-Term trading generally means placing trades with the intention of closing out the position within the same day, also referred to as
“Day Trading” or “Scalping” if trades are opened and closed very rapidly. Due to the speed at which trades are opened and closed, short-term traders use small time-frame charts (Hourly, 30min, 15min, 5min, 1min).

Medium-Term trades or “Swing Trades” typically are left open for a few hours up to a few days. Common time frames used for this type of trading are Daily, 4-hour and hourly charts.

Long-Term trading involves keeping trades open for days, weeks, months and possibly years. Weekly and Daily charts are popular choices for long term traders. If you are a part-time trader, it might be suitable to begin by trading long term trades that require less of your time.

Discretionary vs. Automated

Discretionary trading means a trader is opening and closing trades by using their own discretion. They can use any of the trading styles listed above to create a strategy and then implement that strategy by placing each individual trade.
The first challenge is creating a winning strategy to follow, but the second (and possibly more difficult) challenge is diligently following the strategy through thick and thin. The psychology of trading can wreak havoc on an otherwise profitable strategy if you break your own rules during crunch time.

Automated trading or algorithmic trading requires the same time and dedication to create a trading strategy as a discretionary trader, but then the trader automates the actual trading process. In other words, computer software opens and closes the trades on its own without needing the trader’s assistance. This has three main benefits. First, it saves the trader quite a bit of time since they no longer have to monitor the market as closely to input trades. Second, it takes the emotions out of trading by letting a computer open and close trades on your behalf. This means you are following your strategy to the letter and are not able to deviate. And third, automated strategies can trade 24 hours a day, 5 days a week giving your account the ability to take advantage of any opportunity that comes its way no matter the time of day.

Sergey Golubev
Sergey Golubev  

Learning to Read Forex Charts

Technical analysis is considered one of the easiest ways to analyze the foreign exchange market. It involves the analysis of charts and graphs to ascertain future currency price movements, and differs massively from fundamental analysis in that it does not require the analysis of forex news, reports or other economic releases to establish future price movements. 

Becoming a Technical Analyst  

The first step in becoming a successful technical analyst is to learn how to read forex charts. Outlined below are some simple steps that every trader should take when first starting out with technical analysis:

When analyzing a currency pair you will need to look out for a prevailing trend. Start off with charts that provide long-term data (for example days, weeks and months) and go back over the course of a number of years. Such charts contain an exhaustive amount of data, thus providing a much clearer picture of exactly what the currency pair is doing than if using short-term charts (5 minutes, 15 minutes, 30 minutes or one hour). This extra data also makes the technical indicators much more steadfast and reliable. 

How to Identify a Trend 

To identify a trend simply look at the graph presented before you and decide whether it is rising more than it is falling, or vice versa. Trends can be shallow or sharp, weeks short or years long. Practice identifying trends and locating the moment where the trends change direction.

Even if you are a short-term scalper or day trader who wishes to place a trade for no longer than an hour, it is still important to identify trends. Identifying a trend is one of the best steps a trader can take in executing more accurate, profitable trades. 

Upon identifying a trend in a long-term chart you will then be able to compare that trend with the one that you have found in the short-term charts. Within the path set by the prevailing trend you will discover that there are a variety of short-term and intermediate-term trends. Overall the pattern on the graph will follow a particular path as set by the longest-term trend. 

Identifying Support and Resistance Levels 

After this point you will then need to locate the support and resistance levels. In technical analysis these are regarded as the ‘floor’ and ‘ceiling’ points on a graph and are key locations on a chart where the price continually refuses to break through. The price will reach a peak or a valley, after which point it will not go any further, but will instead alter its direction. The more frequently this occurs, the stronger the support and resistance levels are.   

Draw a straight line as you pass through most of the support points. Draw another line as you pass through most of the resistance points. This provides you with a lucid picture of the price channel, or the path that the currency pair’s trend is following. This is a highly powerful yet incredibly simply tool for determining a currency’s future pathway. 

What is a Range- Bound? 

In the event that ‘range bound’ occurs, this simply means that the support and resistance levels are so strong that the graph’s movements appear to ‘bounce’ in a sideways pattern. Nevertheless this generally occurs 80% of the time and many traders prefer to trade within the channels. 

Breaking out of a Price Channel

In the event that a currency pair becomes released from a price channel, in some instances it falls back into the channel, and in others it gains momentum and continues to move. The latter movement is better known as a ‘momentum market’, and is an alternative way to trade the range: by setting an entry order for the price to break out, either below or above the channel.

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