Summary: Technical Analysis Part II
Ok, now that you have read the lesson material, please make sure you completely understand and/or do the following:
This is a very important lesson, in this lesson we reviewed the basics of price behavior and market patterns. For both, advanced and novice students please give this lesson the importance it deserves and give it another read (specially sections 2 and 3).
Be sure to understand the following:
What each candlestick pattern suggests
Combination of candlesticks and their limitations (very important)
What each chart patterns suggests and their considerations
Ask yourself, which of the technical tools reviewed at this lesson seems more powerful to you?
Play around with these tools during live market conditions and see which ones fit you better. This will help you have a good idea of the type of system you will be using to trade the forex market.
Again, this lesson is very important so make sure to give it a second read.
Brain Feeder 1
Wait a minute (you should ask) so what you are saying is that hammers and hanging mans are exactly the same pattern? Yes, that’s right, by now you should know the difference between those two but there are other conclusions you can take based on this. Give it some thought and try to arrive to your own conclusions.
Yes, hammers and hanging mans are exactly the same pattern, the only difference is where the pattern is formed. Hammers are formed in a downtrend or downside movement while hanging mans are formed in an uptrend or upside movement. What’s the conclusion here? Well I am going to let you think some more on this and we will get to that in future chapters. By the way, the same happens with shooting stars and inverted hammers.
Brain Feeder 2
What’s the difference between Harami and Engulfing Patterns?
The main difference is that the second candlestick (the one in direction of the suggested direction) is shorter in the harami pattern than in the engulfing pattern. This can give you very important information about the future direction and what pattern is more reliable than the other.
Brain Feeder 3
What’s the main difference between Wedge patterns and symmetrical triangles?
You got this one, the main difference is that symmetrical triangles do not have slope while wedges have a clear slope, upward for rising wedges and downward for falling wedges.