Chart Patterns – Head-and-Shoulders
Head-and-Shoulders It’s a top formation. The inverted Head-and-Shoulders is its specular counterpart as a bottom formation. Stages of a Head-and-Shoulders pattern A strong rally followed by a minor pullback forms the left shoulder. Another high-volume rally reaches a higher high and, then, pulls back to or near to the previous low A third rally that…
Chart Patterns – Reversal bars
Reversal bars A bullish reversal bar is a bar with its low making a new low but closing higher. A bearish reversal is a bar where there’s a new high but with the closing lower. Those reversals aren’t significant unless in context with highly oversold or overbought situations. Key reversal bar A bullish key reversal is…
Chart Patterns – Gaps and Spikes
Gaps and spikes are one bar patterns. Other important one bar chart patterns are one bar reversal, inside day and outside day. Gaps and spikes Gaps don’t occur in the 24/7 currency markets. Or do they? That depends on how we define a gap. And what is a gap? Technically is a hole in the…
The psychology of decisions under uncertainty
The psychology of decisions under uncertainty In 2002, Daniel Kahneman received the Nobel prize in economics “for having integrated insights from psychological research into economic science, especially concerning human judgement and decision-making under uncertainty”. Dr.Kahneman did most of the work with Dr Amos Tversky, who died in 1966. Their studies opened a new field in…
The Trading Environment: The Drunkard’s Walk
Introduction In recent years, investors have turned their attention to the currency markets as a way to achieve their financial freedom. Forex is perceived as an easy place to achieve that goal. Trading currencies don’t know about bear markets. Currency pairs simply fluctuate driven by supply and demand in cycles of speculation-saturation, explained by behavioural…