Standard Deviation Channel

Standard Deviation Channel is built on base of Linear Regression Trend representing a ussual trendline built between two points on the price chart using the method of least squares. As a result, this line proves to be the exact median line of the changing price. It can be considered as an equilibrium price line, and any deflection up or down indicates the superactivity of buyers or sellers respectively.

Standard Deviation Channel consists of two parallel lines, equidistant up and down from the Linear Regression Trend. The distance between frame of the channel and regression line equals to the value of standard close price deviation from the regression line. All price changes take place within Standard Deviation Channel, where the lower frame works as support line, and the upper one does as resistance line. Prices usually exceed the channel frames for a short time. If they keep outside of the channel frames for a longer time than usually, it forecasts the possibility of trend turn.

Fibonacci Channel

Fibonacci Channels are built using several parallel trend lines. To build this instrument, the channel having the width taken as a unit width is used. Then, parallel lines are drawn at the values equal to the Fibonacci Numbers, beginning with 0.618-fold size of the channel, then 1.000-fold, 1.618-fold, 2.618-fold, 4.236-fold, etc. As soon as the fifth wave finishes, correction in the direction opposite to the trend can be expected.

It is necessary to remember for a correct Fibonacci Channel building: base line limits the upper part of the channel when trend is ascending, and the lower part of it when trend is descending.

Speed Resistance Lines

Speed Resistance Lines are a figure for which it is difficult to define the general rules by quantity of maxima, minima, to the purposes of movement, etc. Therefore, it is usually allocated separately.

Speed Resistance Lines is the consecutive whiten trend movement, which corrections pass under different corners from an index point of trend movements.

At construction of Speed Resistance Lines, the following rule is used:

1. The minimum of a trend and the reached maximum of a trend are the reference point.

2. The line, which shares on pieces 2/3, 1/2 and 1 /3, is drawn. Speed Resistance Lines are drawn through these points. Break of line's thirds is considered a strong signal on sale.

Usually after break the first line as supports, there is a fast achievement of a following line, and the first becomes the resistance of movement. When the second line is broken, it also becomes resistance, and support becomes the third.

Thus, the prices for some time become "locked" between two lines.

Usually it is considered, that break of the third beam is a signal on purchase at a turn of an ascending trend or a signal on sale at a turn of a descending trend.

Example of "Speed Resistance Lines"

The situation with a descending trend will be mirror-like.

Triple top

Triple Top is a pattern in which a currency has reached a price three times previously, yet has been unable to sustain movements beyond those three peaks. A triple top signifies a strong resistance level.Another type of triple is Triple Bottom

• Point A - first top
• Point B - local minima
• Point C - second top
• Point D - local minima
• Point E - third top
• Point F - signal to sell

Example of a "triple top"

Forex Technical Analysis

This article provides insight into one of the two major methods of analysis used to forecast the behavior of the Forex market. Technical analysis and fundamental analysis differ greatly, but both can be useful forecast tools for the Forex trader. They have the same goal - to predict a price or movement. The technical analyst studies the effect while the fundamentalist studies the cause of market movement. Many successful traders combine a mixture of both approaches for superior results.

Technical analysis

Technical analysis is a method of predicting price movements and future market trends by studying charts of past market action. Technical analysis is concerned with what has actually happened in the market, rather than what should happen and takes into account the price of instruments and the volume of trading, and creates charts from that data to use as the primary tool. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.

Technical analysis is built on three essential principles:

1. Market action discounts everything! This means that the actual price is a reflection of everything that is known to the market that could affect it, for example, supply and demand, political factors and market sentiment. However, the pure technical analyst is only concerned with price movements, not with the reasons for any changes.
2. Prices move in trends. Technical analysis is used to identify patterns of market behavior that have long been recognized as significant. For many given patterns there is a high probability that they will produce the expected results. Also, there are recognized patterns that repeat themselves on a consistent basis.
3. History repeats itself. Forex chart patterns have been recognized and categorized for over 100 years and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time.

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)
• Fibonacci Studies
• Gann Tools
• Channels
• Waves (Elliott wave theory)
• Gaps (high-low, open-closing)
• Trends (following moving average).