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forex2tradeindiahttp://

forex2tradeindia.weebly.com/

Email : - forex2tradeindia@yahoo.com

Your Success

Story Begins

from HERE

TECHNICAL AnalysisLogical Thinking towards Price ActionDynamic Subject

From the desk of

venKEY

…………………….Hyderabad-AP

INDIA

Trading FriendTrend Advisor

VOLUME

Indicators/Oscillators(Diagnosis)

Trade with

<CHARTS>INDICATOR

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PRICE & TIME(health of the Stock)

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Finding Price Action

& Confirmation

Technical Analysis -

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• Moving Averages

• Support &

Resistance

(Moving Average

based)

• Bollinger Bonds

• Parabolic SAR

• Pivot Points

• Fibonacci

• Heikin Ashi

• Itchmuchi

Symptoms (on CHART)

From the desk of

- venKEY2

How to win Market with(out) Technical Indicators.Technical Analysis is the biggest aspects that influences the trader’s mind and decision when start trading.

Thousands of indicators even strategies and tricks can be easily found in many in forums but only few make money? Right.

Why do you fail using technical indicators?Because technical indicators can not beat News or Fundamental Analysis.

Believe in Charts

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PRICE ACTION (without Indicators)

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PRICE VOLUME(Open Interest)

INTERPRETATION

Rising Rising- STRONG - BULLISH•Price continue to RISE

Rising Falling- WEAKENING- MODERATELY BEARISH*Current uptrend WEAKENING

Falling Rising- WEAK- BEARISH* Downtrend Continues

Falling Falling- STRENGTHENING- MODERATELY BULLISH•Current Down Trend Weakening

Go LONG aboveIf price sustains

above 2nd Resistance Level

Go SHORT below

If price sustains below 2nd

Support Level

BUY on DIPSWhen Market opens GAP DOWN (follow trend)SHORT on HIGHWhen Market opens GAP UP (follow trend)FLAT MARKETBuy Above LevelsSELL- below Levels

Identify Market Interpretation using PRICE & Volume

All Stop Loss on Closing Basis & Also Follow Trend

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INDICATORS TRIES TO READ

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The SAGA of an INVESTOR

Price>

www.forex2tradeindia.weebly.com

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Candlestick Chart

TA - INDICATORS

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Introduction- This article is designed to introduce the concept of technical indicators and explain how to use them in your analysis. - We will shed light on the difference between leading and lagging indicators, as well as look into the benefits and drawbacks. - Many, if not most, popular indicators are shown as oscillators. With this in mind, we will also show how to read oscillator and explain how signals are derived. Later we will turn our focus to specific technical indicators and provide examples of signals in action.

Moving Average Cross Over Buy

Volume

Fractals

UpperBollinger Bond

LowerBollinger Bond

Lower Time FrameMoving Avg.

Script / Time Frame / O H L C

A technical indicator is a series of data points that are derived by applying a formula to the price data of a security. Price data includes any combination of the open, high, low or close over a period of time. Some indicators may use only the closing prices, while others incorporate volume and open interest into their formulas. The price data is entered into the formula and a data point is produced. For example, the average of 3 closing prices is one data point ( (41+43+43) / 3 = 42.33 ). However, one data point does not offer much information and does not an indicator make. A series of data points over a period of time is required to create valid reference points to enable analysis. By creating a time series of data points, a comparison can be made between present and past levels. For analysis purposes, technical indicators are usually shown in a graphical form above or below a security's price chart. Once shown in graphical form, an indicator can then be compared with the corresponding price chart of the security. Sometimes indicators are plotted on top of the price plot for a more direct comparison.

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MOVING Averages (1/2)

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1. SMA (Simple Moving Avg.) Calculation:Daily Closing Prices: 11,12,13,14,15,16,17 First day of 5-day SMA: (11 + 12 + 13 + 14 + 15) / 5 = 13 Second day of 5-day SMA: (12 + 13 + 14 + 15 + 16) / 5 = 14 Third day of 5-day SMA: (13 + 14 + 15 + 16 + 17) / 5 = 15

2. EMA (Exponential Moving Avg.) Calculation:SMA: 10 period sum / 10 Multiplier: (2 / (Time periods + 1) ) = (2 / (10 + 1) ) = 0.1818 (18.18%) EMA: {Close - EMA(previous day)} x multiplier + EMA(previous day)}

• Moving averages smooth the price data to form a trend following indicator (TFI)

• They do not predict price direction, but define the current direction with a lag (because basing on past prices)

• Despite this lag, moving averages help smooth price action and filter out the noise.

• They also form the building blocks for many other technical indicators and overlays, such as Bollinger Bands, MACD and the McClellan Oscillator.

• These moving averages can be used to identify the direction of the trend or define potential support and resistance levels.

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we shall not ignore when it gives a signal. Confirm

with other Indicators

3. TMA (Tri-angler Moving Avg.)The triangular moving average (TMA) is a weighted average of the last n prices (P), whose result is equivalent to a double smoothed simple moving average (i.e. calculated twice).(this is not popular Technically)Calculation:    SMA = (P1 + P2 + P3 + P4 + ... + Pn) / n    TMA = (SMA1 + SMA2 + SMA3 + SMA4 + ... SMAn) / n

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Finally about MAs•It is a TFI•Not works where no trend•Cross over is criteria•Laggard Indicator•Valid and True Indicator

Trading with Moving Averages: (Moving averages can work only when trend is there)

………………………………………….…………..In a perfect uptrend 13 EMA will be greater than 30 EMA where both the line continue to rise. ………………………………………………..……In a perfect down trend 13 EMA will be lesser then 30 EMA where both the line continues to fall.……………………………………………………..When 13 EMA goes above 30 EMA known as GOLDEN cross-over/BULLISH cross-over ………………………………….…………………..and where 13 EMA goes below 30 EMA known as DEAD cross-over/BEARISH cross-over.

Moving Average is a Trend following Indicators (only TFI can generate Buy/Sell Signals)

Oscillators (helps analyst about the movement and trend of stock) also known Co-incidental indicators. Moving average is one of the MOST TRUSTED trends following indicator. It is based on closing price basis. Moving average basically a mathematical device which is used to detect the UNDERLINE trend of the market. There are several type of Moving averages but modern technical used Exponential moving averages. Moving average as TFI always generates late signals. So it is regarded as the ‘LAGGERED indicator” But when moving average generate a valid signal it s so confirmed that one should not ignore it.

In the past Technical Analyst use only single moving average i.e., 13 day (13 EMA)… But with passage of time more and more research have coming into the subject and system of Double Moving Average was introduced. Relative positioning of 13 and 30 EMA gives us BUY and SELL signals as the case may be.

Day 1 2 3 4 5 6 7 8 9

Price 16

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17 10 17 18 17 17 17

5 SMA

- - - - - 15.4

15.8

15.8

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Moving Average Calculation

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Support / Resistance - MAs

Price frequent touch the line and trades below due to lack of fresh liquidity

- Price appears costly - Technical Selling - Low Sl. & High Tgt.

- Bears try hold …………………………Often referred to

as “MA-Resistance Level". 

-: Scalpers :-Periods : 5/ 13 MA

Time Frame : M-15, M-30

-: Day traders :-Periods :13 / 30 MA

Time Frame : M-15, M-30

-: Swing traders :-Periods : 30 / 50 MA

Time Frame : M-15, M-30

- : Long Term traders :-Period :30 /100 / 144

/200 MATime Frame :

(H4/Day/Weekly)

Memories of Trades to recall /wish again

Support & Resistance are INTER-

CHANGABLE

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Trader type vs. Moving Averages (Sup.& Res.)

- Price frequently gets fresh liquidity @ that Avg. Price.

- Price appears cheap- Technical Interest - Risk : Reward is good.

- Traders emotions/Short-covering can seen

…………………………- Often referred to as the “MA-Support

Level“.Violation of MA-Support and Crossing below of Higher Time Frame MA gives…Technically SELL calls

Violation of MA-Resistance and Crossing above to Higher Time Frame MA gives…Technically BUY calls

p MA = Period Moving Average (No. of Candles/Bars) d MA = Day Moving Averages (No. of Days

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RESISTANCESUPPORT

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BOLLINGER Bonds

Bollinger Bands -technical trading tool (John Bollinger 1980)  They arose from the need for adaptive trading bands and the observation that volatility was dynamic, not static as was widely believed at the time. 

Bollinger Bands is to provide a relative definition of high & low. By definition prices are high @ upper band and low @ the lower band. This definition can aid in rigorous pattern recognition and is useful in comparing price action to the action of indicators to arrive at systematic trading decisions. 

Bollinger Bands consist of a set of three curves drawn in relation to securities prices. The middle band is a measure of the intermediate-term trend, usually a simple moving average, that serves as the base for the upper band and lower band. The interval between the upper and lower bands and the middle band is determined by volatility, typically the standard deviation of the same data that were used for the average.

A band plotted two standard deviations(2) away from a simple moving average (20),

Periods : 20 Standard Deviation :2

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PARABOLIC SAR

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It works very fine in Trending Market.In a Choppy Trend it give False trade reversals – confirm with Higher Time Frames / Prime (Main) trend

Parabolic = Follow; SAR=Stop And Reverse

Parabolic SAR is an indicator that, like Bollinger Bands is plotted on price.

General idea : buy in up trends when the indicator is below price, and sell in down trends when the indicator is above price.

In positions : Parabolic SAR assists in managing the position with trailing-stop (Dots).

Good Combination is :Parabolic SAR + ADX (Trend Strength)Trading with Parabolic SAR

Buy Conditions :(1)Parabolic SAR Dot below

Price Candle(2)ADX is Above 20

Sell Conditions :(1)Parabolic SAR Dot above

Price Candle(2)ADX is Below 50

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PIVOT PointsProfessional traders & market makers use pivot points to identify important support and resistance levels.

Simply put, a pivot point and its support/resistance levels are areas at which the direction of price movement can possibly change.

Pivot points useful to short-term traders who are looking to take advantage of small price movements.

Pivot points can be used by both range-bound traders and breakout traders. Range-bound traders use pivot points to identify reversal points.

Breakout traders use pivot points to recognize key levels that need to be broken for a move to be classified as a real deal breakout.

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Pivot point (PP) = (High + Low + Close) / 3Support and resistance levels are then calculated off the pivot point like so:

First level support and resistance:First support (S1) = (2*PP) – HighFirst resistance (R1) = (2*PP) – Low

Second level of support and resistance:Second support (S2) = PP – (High – Low)Second resistance (R2) = PP + (High - Low)Software will automatically plot it on the chart.

Pivot Calculation

HOW to trade with PIVOTs :If price at PP, watch for a move back to R1 or S1.If price is at R1, expect a move to R2 or back towards PP.If price is at S1, expect a move to S2 or back towards PP.If price is at R2, expect a move to R3 or back towards R1.If price is at S2, expect a move to S3 or back towards S1.If there is no significant news to influence the market, price will usually move from P to S1 or R1.

In a strong trend, price will blow through a pivot line and keep going.

Pivot lines work well in sideways markets as prices will most likely range between the R1 and S1 lines.

Pivot Support & Resistance (Daily/Weekly)

If there is significant news to influence the market price may go straight through R1 or S1 and reach R2 or S2 and even R3 or S3.

R3 and S3 are a good indication for the maximum range for extremely volatile days but can be exceeded occasionally.

R-3

R-2

R-1

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S-1

S-2

S3

Confirm Main Trend & Overbought &

Oversold Conditions

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Facts of Fibonacci Ratios (known as Fibo Trading Levels)

1. Common Fibonacci retracement levels are 38.2%, 50%, and 61.8% of the primary trend (Most Popular Charting Software standard levels.)

2. Fibonacci retracement levels act almost as magnets once the counter trend rally takes place. 

3. There are a few other Fibonacci levels 75%, 78.6%, 87.5%, and 88.7% that can provide resistance.

4 Thumb Rule is when the 50% retracement level is taken out, the four levels become magnets to attract price. 

Division of TREND in % (Candle %) {PRICE level}

The ratios arise from the following number series: 1, 1,1, 2, 3, 5, 8, 13, 21, 34, 55, 89,

144...

FIBONACCI ratios Leonardo Fibonacci,  Italian mathematician. 

Fibonacci ratios correlate two trends; (1) primary (2) secondary. 

The primary trend refers to a trending move in one direction while the secondary trend will refer to counter trend moves in the opposite direction. 

1. Price action must be analyzed at those levels to understand if the countertrend move will cease or whether it will continue to fully retrace the primary move.

2. Fibonacci retracement levels are used by many floor traders and therefore become very relevant to your Fibonacci trading activities. 

3. These levels are so widely used now by traders, including systematic trading, that they almost become a self-fulfilling prophecy.  

4. Some advanced traders will take it a step further and add Fibonacci arcs and Fibonacci fans to their trading arsenal, in search of an edge.

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Trading Use : Heikin Ashi charts are used in trading in the same manner as standard candlestick or bar charts. (chart patterns are used to indicate price movements).

Heikin Ashi charts have an additional aspect in that the direction of the bar (in color) is supposed to indicate the overall direction of the market, while ignoring the intermediate direction.(detects false changes of direction).

In the example chart, the standard candlesticks (the upper section) change direction (i.e. color) quite often even though the price is still moving in the same overall direction.

HEIKIN AshiHeikin Ashi is a type of trading chart that originated in Japan (heikin ashi translates as average bar). Heikin Ashi charts are similar to candlestick and bar charts in that they show similar information (the open, high, low, and close of the time frame), but Heikin Ashi charts calculate the information differently.

Heikin Ashi charts are usually displayed as candlestick charts (i.e. where the color of the candlestick denotes the direction), but they can just as easily be displayed as bar charts (i.e. where the location of the open and close denote the direction).

Heikin Ashi charts are usually used in place of a standard candlestick or bar chart, but can also be displayed in addition to the standard chart (i.e. as an indicator). In the example chart, the standard candlestick chart is shown in the upper section, and the Heikin Ashi chart is shown in the lower section

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Description: Heikin Ashi charts calculate their own open (HAO), high (HAH), low (HAL), and close (HAC), using the actual open (O), high (H), low (L), and close (C), of the time frame (e.g. the open, high, low, and close, of each five minutes).

Calculation:     HA Open = (HAO-1 + HAC-1) / 2    HA Close = (O + H + L + C) / 4    HA High = Highest(H, HAO, HAC)    HA Low = Lowest(L, HAO, HAC)

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The Heikin Ashi candlesticks (the lower section) change direction (i.e. color) less often, indicating that the price is still moving in the same direction.& Shows Strength

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Heikinashi on Candlestick Chart

Heikinashi ChartBuy @ green Candle, Sell @ Red Candle

Itch MOKU

How to trade with this wonderful setup which is actually a combination of Ichimoku Kumo

Breakouts and Heikin Ashi’s Doji Candle for the Exit strategy.

This strategy can be applied on any market and any timeframe.

We get better and more reliable signals on 4H

Trading Rules:

1. Wait for the Candle to Close outside Kumo Cloud2. During Next Candle, place a Pending Order at the Closing Price of last candle3. Place the Initial SL below the Kumo Cloud4. Enjoy your trade as long as the price is above Kumo Cloud (for Bullish trades, price should be below Kumo Cloud for Bearish Trades)5. Watch out for Heikin Ashi Doji Candle6. Once you’ve a Doij (Closed) candle, move your SL at the LOW of that Doji Candle7. If the DOJI is validated, the LOW should be taken out during the next few candles and your profits will be booked8. If the DOJI wasn’t validated (as it happened at Point 2 in our chart) your trade will continue9. Keep looking for New DOJI candles and move the SL at the LOW of new DOJI Candles (notice how our profit was booked at Point 3)10. Same procedure applies in reverse form for a Short Selling Trade

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