Forex graphical analysis is an analytical method that predicts future foreign exchange market price trends by summarizing and summarizing past price evolution patterns on the price chart. Typical price evolution patterns include two types, one is the reversal pattern, and the other is the continuous pattern.
Double top is commonly known as M head graphics. Double tops are a major trend signal in the graph. A price trend graph formed when the price rises to a similar height twice in a certain period of time. The double-top pattern appears at the top of the price as if two hills are connected, reflecting the weak market outlook. When the price lags behind the first top, trading volume usually shrinks. Furthermore, if the price falls below the previous support line (neckline), it will fall more rapidly, and the support line will therefore change to a resistance line.
According to the above legend, from point A to point B is an upward trend. When a resistance level is encountered, market conditions immediately fall back. After staying at the low level for more than 3 months, the market conditions rose to another high point C again. However, the market outlook fell rapidly and formed a double top pattern. It can be seen that the trend has indeed reversed, and if the price drops below the price of point A, it will send a signal to break the support level.
Double bottom is commonly known as W bottom. It is a trend graph formed when the price drops to similar lows twice in a certain period of time. When there is a double bottom, it is usually reflected in the downward shift from a bear market to a bull market. Once a double bottom pattern is formed, you must pay attention to whether the pattern definitely breaks through the resistance line. If it breaks through the resistance line, it indicates a strong demand. Trading volume usually increases substantially due to callbacks. Double bottom can also use the capital flow index and the volume balance index (OBV) in the technical analysis indicators to analyze the strength of trading. If the price breaks through the resistance line, the resistance line becomes a support line as a result.
The triple top is also called the three heads. It is a reversal chart form formed by three similar highs, and it usually appears in rising market conditions. The typical triple top usually appears in a short period of time and is formed by piercing the support line. Another confirmation triple top signal can be found in the overall trading volume. When the pattern is formed, the trading volume decreases immediately until the price rises to the third high again, and the trading volume begins to increase, forming a confirmation triple top signal.
The formation of the lowest point, investors usually use it as the main support line. When the price appears a double top, it falls back to close to the neckline (support level), and then rebounds to the original double top position and then falls back after encountering resistance. If the price falls below the neckline, it will fall sharply, and the triple top pattern has been confirmed.
The triple bottom is the reflection of the triple top pattern, formed at a three-point similar low in a falling market. When the price swings upward, a major turn signal is issued. Compared with the triple top, the triple bottom pattern usually delays for several months and breaks through the resistance line before it is confirmed as a triple bottom pattern. Another confirming triple bottom signal can be found in trading volume. When the graph is in progress, the volume will decrease until the price rises to the third low again, the volume will start to increase, forming a confirmation triple bottom signal.
The formation of the highest point, investors usually use it as the main resistance line, the price rises to close to the neckline after a double bottom occurs, and returns to the support level of the double bottom level when it meets resistance again. The price failed to break below this support level, and at that time the trading volume plummeted and began to rebound, and the trading volume immediately increased. When the price rose above the neckline, the volume surged. After the price broke the neckline upwards, the triple bottom pattern has been confirmed.
Head & Shoulders Top:
'Head & Shoulders Top' is one of the most common inverted pattern charts. Head and shoulders follow the upward market trend and signal a reversal in market conditions. As the name suggests, the graphic consists of the left shoulder, head, right shoulder and neckline. When three consecutive prices form the left shoulder, the volume must be the largest, followed by the head, and the right shoulder should be thinner.
Once the price breaks below the support line (neckline), there will be a more rapid and large decline. Volume can serve as an important indicator for the head and shoulders pattern. In most cases, the increase in the left shoulder must be higher than the increase in the right shoulder. The falling volume and the head’s new high can serve as a warning sign that the market is on the horizontal line. On reversal.
The second alarm is when the price falls from the peak of the head, crossing the high point of the right shoulder. The final reversal signal is that after the price drops below the neckline, there is a phenomenon of "back pumping". After the price hits the neckline, there is no breakthrough and immediately sell.
In most graphics, when the support line is broken, the same support line turns into a resistance line in the market outlook.
Head & Shoulders Bottom:
'Head & Shoulders Bottom' follow the downward trend and signal a reversal in market conditions. As the name suggests, the graphic consists of the left shoulder, head, right shoulder and neckline. Among the three consecutive valleys, the middle valley (head) is the deepest, and the first and last valleys (left and right shoulders, respectively) are shallower and nearly symmetrical, thus forming a head-and-shoulders bottom pattern. Once the price rises above the resistance line (neckline), it rises sharply.
Volume can serve as an important indicator for the head and shoulders bottom pattern. In most cases, the left shoulder is larger than the right shoulder and the head. The declining volume and the head’s new low can serve as a warning sign that the market is on the horizontal line. reverse.
The second alarm is when the price rises from the peak of the head, that is, after the price breaks through the neckline upwards, it falls back to the neckline support level again, and then rises sharply. The final reversal signal is when the price breaks the neckline of the upper window, seize the opportunity to buy in. If you fail to follow up, you can buy when a "back draw" returns to the neckline support level.
In most graphics, when the resistance line is broken, the same resistance line turns into a support line in the market outlook.
An ascending wedge occurs in a sharply falling market, then rises and the transaction price narrows all the way. The rising wedge can be divided into two types: continuous or reversal. In the continuous graph, the ascending wedge tends to slope upward until it meets the current downward trend. The reversal pattern will also be upward sloping, but the transaction will rise accordingly. Regardless of any kind of graphic, this graphic is considered bearish.
The rising wedge is usually delayed for three to six months and can provide investors with a warning signal that the market is reversing. The formation of an ascending wedge should be at least two high points, the highest of each point and the previous highest point connected to form a highest resistance line; similarly, at least two low points, the lowest of each point and the previous lowest point connected Into a minimum support line. In the rising wedge, the price rises and there is little selling pressure, but the interest of investors gradually decreases. Although the price rises, each new upward volatility is weaker than the previous one. Finally, when the demand completely disappears, the price will change. Reverse and fall back. Therefore, the ascending wedge represents a gradual decline in technical significance. When the lower limit is broken, it is a sell signal.
A falling wedge is a common pattern that appears at the top of rising prices. During the consolidation period when the price fluctuates slightly, the falling wedge can be divided into two types: continuous and reversal.
In the continuous graph, the descending wedge slopes downward until it meets the current upward trend. Conversely, the reversal pattern also sloped downward, but the transaction declined accordingly. Regardless of any type, this graphic is considered promising.
The falling wedge is usually delayed for three to six months and can provide investors with a warning signal that the market is reversing. The formation of a descending wedge should be at least two high points, the highest of each point and the previous highest point connected to form a highest resistance line; similarly, at least two low points, the lowest of each point and the previous lowest point connected Into a minimum support line.
After the price has risen for a period of time, profit-taking appears. Although the bottom line of the falling wedge slopes downward, it seems to indicate that the market is not strong, but the new wave has a smaller volatility than the previous wave, indicating that the selling force is positive. Weakening, coupled with the reduction in trading volume at this stage can prove the weakening of market selling pressure.
In the falling wedge, the price rises and there is little selling pressure, but the interest of investors gradually decreases. Although the price rises, each new upward fluctuation is weaker than the previous one. Finally, when the demand completely disappears, the price will be reduced. Reverse and fall back. Therefore, the descending wedge represents a gradual diminishing of technical significance. When the lower limit is broken, it is a sell signal. The appearance of the falling wedge tells us that the rising market has not yet peaked. This is just a normal adjustment phenomenon after the rise. Generally speaking, most patterns are broken upwards, and when their upper limit resistance breaks, it is a buy signal.
Rounding Bottom, also known as dish shape or bowl shape, is a reversal shape, but it is not common. Most of these patterns appear during a long period of consolidation from a bear market to a bull market. But in our example, take the short-term consolidation period as an example.
Round bottoms often appear after a long-term decline, and lows usually record new lows and fall back. The round bottom pattern can be divided into three parts: down, down, and up.
The first part of the pattern is descending: leading the circle to the low position. The slope of the drop will not be excessive. The second part is the lowest position of the arc base, which is similar to the pointed base, but not too sharp. This part usually occurs for a long time or can rise up to one month. The last part is the ascending part, which is usually the back of the graph and approximately the same time as the descending part. If the rising part rises too fast, it will destroy the entire pattern and become a false signal.
Looking at the entire graph, if the price has not broken through the resistance level, that is, where the graph begins to fall; the round bottom has not yet been confirmed. The volume usually follows the round bottom pattern: the highest position is the beginning of the decline, the lowest position is the end of the decline, and the rise becomes stronger.
Cup handle shape:
The cup-handle shape is a continuously rising form, which follows the breakthrough of the upper channel to form a period of finishing time. The shape of the cup handle can be divided into two parts: the cup and the cup handle. When the price rises for a certain period of time, a cup shape is formed. Its appearance is like a bowl or a round bottom, and it also looks like a U shape. Because the U shape is flatter than the V shape, the cup shape can be determined to be a finishing shape with strong support at the bottom.
When the cup shape is formed, the short-term transaction is the evolutionary period of the cup handle. It then breaks through the range of the cup handle and provides a stronger signal of an upward trend. Generally, the shorter the pullback of the cup handle is, the more it forms an upward trend and strengthens its breakthrough. When the breakout occurs, the volume is obviously rising.
The flag shape is like a flag hung on the top of the flag, which usually appears during rapid and large market fluctuations. After a series of tight short-term fluctuations, the price forms a rectangle that is slightly inclined in the opposite direction to the original trend. This is the flag-shaped trend. The flag trend is divided into the rising flag and the falling flag.
After the price has risen steeply, a tight, narrow and slightly downward-sloping price-intensive area is formed. Connecting the high and low points of this dense area respectively, two parallel and downward-sloping straight lines can be drawn. This is the rising flag shape. When the price drops sharply or vertically, a narrow and tight volatility and a slightly upward price-intensive area is formed, like an ascending channel, which is the downward flag shape.
After the completion of the pattern, the price will continue to move to the original trend, the rising flag will break upward, and the falling flag will break down. Most of the rising flags appear at the end of the bull market, which implies that the rising market may come to an end; while the falling flags mostly appear at the beginning of the bear market, indicating that the market may fall vertically, so the formed flag is small, about Three or four trading days have been completed, but if it occurs at the end of the bear market, it will take a long time to form, and only a limited decline can be made after the break. The wedge-shaped flag is formed by two straight lines moving in the same direction and retracting, and these two straight lines form a long and flat triangle in a relatively short period of time. A wedge shape often appears in the center of an uptrend or downtrend, that is, the mid-stage consolidation during the rise and the rebound escape wave during the fall. Most of the trading volume gradually decreases during the consolidation process, and the volume after the breakout or break. Able to zoom in significantly.
In an upward trend, the wedge-shaped flag slopes from the upper left to the lower right; in a downward trend, it slopes from the lower left to the upper right. The shape is similar to the flag shape, much like the flag hung on the stern.
Symmetrical Triangle (SymmetricalTriangle) is also called equilateral triangle. Under normal circumstances, symmetrical triangle is a sorting pattern, that is, the price will continue to move in the original trend. It is composed of a series of price changes, the range of which is gradually reduced, that is, the highest price of each change is lower than the previous level, and the lowest price is higher than the previous lowest price, showing a compressed graph. If you look at the field of price changes from a horizontal direction, the upper limit is a downward sloping line, and the lower limit is an upward sloping line. Connecting short-term highs and lows with straight lines, you can form a symmetrical triangle.
The volume of the symmetrical triangle is decreasing due to smaller and smaller price changes, which reflects the hesitant wait-and-see attitude of the long and short forces on the market outlook. Then when the price suddenly jumps out of the triangle, the volume of the transaction increases accordingly.
If the price breaks above the resistance line (which must be supported by a large volume), it is a short-term buy signal; on the contrary, if the price breaks downward (breaks through a low volume), it is a short-term sell. Signal.
Ascending triangle(Please see the picture above):
Ascending Triangle (Ascending Triangle) usually when the line of the ascending point is close to the level, the low point of the line of the retracement is gradually raised, thus forming an upward sloping upward slope, and at the end of the finishing pattern, accompanied by The increase in the amount of attack energy generally has a higher chance of breaking through.
The price shows strong selling pressure at a certain level. The price rises from a low point to a level and then falls back. However, the purchasing power of the market is still very strong. The price rebounds immediately before returning to the last low point. The price continues to fluctuate with the fluctuation of the resistance line. Narrowing day by day. If we connect each short-term fluctuation high point, we can draw a resistance line; and each short-term fluctuation low point can be connected to another upward-sloping line, forming an ascending triangle. The volume of transactions keeps decreasing during the formation of the pattern.
The ascending triangle shows the contest between buyers and sellers in this range, but the buyer's power has slightly prevailed in the struggle. Sellers continue to sell at their specific price level and are not in a hurry to ship, but they are not optimistic about the market outlook, so they will sell every time the price rises to the ideal selling level, so that selling at the same price forms a horizontal supply line. However, the buying power of the market is very strong. They don't wait for the price to fall back to the last low point, and even more eagerly to buy, thus forming a demand line inclined to the upper right.
Descending triangle(Please see the picture above):
Descending Triangle usually tends to be horizontal when the line of the retracement low point is close to the level, and the line that returns to the rising point slopes downwards, which means that the strength of the market seller is gradually increasing, and the high point evolves over time. The higher the market, the lower the line. The buying order supported by the stall gradually weakened, and the selling pressure of retreating to the sidelines gradually increased. When the buying force weakened and the selling pressure gradually increased, it was sorted to the end. The amount of coordination could be moderately enlarged, and the price fell and broke. The chance is greater.
The shape of the descending triangle is exactly the opposite of that of the ascending triangle. The price has stable purchasing power at a certain level, so every time it falls to that level, it will rise again, forming a horizontal demand line. However, the selling power of the market has continued to strengthen. Each time the price fluctuates, the high point is lower than the previous one, thus forming a downward sloping supply line.
The descending triangle is also a contest between longs and shorts, but the strength of longs and shorts is the opposite of the situation shown by the ascending triangle.
PriceChannels is a continuation graph, and its slope tends to be upward or downward, depending on whether its price transactions are concentrated within the upward or downward trend line. The upper trend line is a resistance line, and the lower trend line is a support line. When the price channel slopes downward, it is regarded as a down market, and when the price channel slopes upward, it is regarded as an upward market.
The price channel formed by two trend lines, one is called the main trend line and the other is called the channel line. The main trend line determines the strong trend. For example, when the ascending (descending) channel slopes upwards (downwards), at least two points of low points (high points) are connected in a line and drawn.
The other trend line is called the channel line and is balanced with the main trend line. The channel line is drawn with high and low points. In an ascending channel, the channel line is a resistance (support) line. In the descending channel, the channel line is a support line.
When prices continue to rise and fluctuate within the range of the channel, the trend can be regarded as a bull market. When the price fails to reach the channel line (resistance line), an urgent change in the trend can be expected. When the main trend line (support line) is subsequently broken, it can provide confirmation that market conditions will reverse. On the contrary, when the channel line is crossed, it can be regarded as a bull market and implies that the price will continue to rise.
Rectangle, also called box shape, is also a typical sorting form. When the price rises to a certain level, it encounters resistance and turns back, but it quickly gained support and rebounded. However, when it returned to the same high point, it was blocked again, and when it fell to the last low point, it was supported again. These short-term highs and lows are connected by a straight line, and a channel can be drawn. This channel is neither upward or downward, but develops in parallel. This is a rectangular shape.
Generally speaking, when the cowhide on the market goes up and down, both the rising and falling markets may appear. Long, narrow rectangles with small trading volume often appear at the original bottom. After breaking the upper and lower limits, there are buying and selling signals, and the fluctuation range is usually equal to the width of the rectangle itself. When the upper limit resistance is broken upward, it is a "buy signal". On the contrary, if it goes down and breaks down, it is a "sell signal". In the process of forming the rectangle, unless there is a sudden news disturbance, its trading volume should be continuously reduced. If irregular high deals occur during the formation of the pattern, the pattern may fail. When the price breaks through the upper limit of the rectangle, it must be accompanied by a surge in volume; but if it falls below the lower limit, there is no need for an increase in high volume.
After the rectangle shows a breakthrough, the price often reverses. This situation usually occurs in the three-day to three-star period after the breakthrough. The reverse draw will stop above the top line level, and the false rebound after falling and breaking will be blocked below the bottom line level.