Vendor trading rules
- Analyst AZA
Vendor: trading rules based on the use of this figure
Graphical analysis on Forex is a simple, intuitive analytical method that allows traders to trade and make good profits using fairly simple formations. Technical analysis includes more than 10 graphic models. In this article, we will talk about the pennant - a figure that is part of the continuation pattern in the currency markets. The pennant can be actively used to enter the direction of the emerging trend (at the end of the correction). Figure pennant - a technical model for the continuation of the trend. Visually, the figure of the descent with a small triangle (quite distorted, or symmetrical), the formation of which occurs after the cutting of the impulse movement. A trader can watch this on forex charts. By itself, the formation shows the players about the continuation of the current trend. The main and most important condition is the convergence of the lines of the triangle. The pattern should be directed to the side that is opposite in the direction of the main trend movement. The concept of the formation of a pennant continuation pattern in the classic analysis of currency markets:1) sharp medium-term trend movement;2) the correction period - the formation of 3-6 waves of the model;3) the resistance level plays the role of the upper boundary of the pattern;4) the support line serves as the lower boundary of the formation. The lines converge, and the climax is near, and accordingly, the tension on the stock exchange only increases. Behind the breakdown of resistance (or support) follows a sharp price movement, similarly, as before the structure of the pennant. Note that the formation of pennants, sometimes, is carried out at the top of the trend, under important price levels. Such patterns are likely to be countertrend in nature: in this situation, the shape of models should be directed towards the main trend. By itself, the pennant figure (if viewed from the point of view of technical analytics) does not guarantee (absolutely and absolutely) that the movement on the market will certainly continue. On Forex, it happened that the figures just broke through, and the price, in turn, made a turn and turned in the opposite direction. At the time when the pendant has already started to form on the forex market - about half of the trend movement has already left behind. Some influential traders start fixing income, and the rest - those who have disregarded the installation of a stop-order (stop-loss), and conducted trade against the market, now suffer losses and are forced to close, so as not to lose more. As for the pennant, its classical version implies a five-wave model - a figure that reduces the period of formation of each of the waves. But in reality, the first wave is created from several candles, for example, it is caused by unexpected news or an unpredictable event. Also, consider the volumes (within the boundaries of the formation). For example, if there is a bearish one, then the volume should rise when the chart moves down and fall when the triangle is being created. The increase in volumes, when the breakdown occurs, indicates that large investors are determined to continue the trend. The pennant is usually traded on the older timeframes - from H1 and higher. To designate a model on the currency pair chart, players use the standard tool - the line simulator or figure triangle. An important stage associated with the preparation for the installation of orders, it is more rational to start on a 3-4 wave of the figure, or after forming 50% of the triangle. By all the canons of those. analysts, the breakdown happens precisely in this period of model formation. As for the tactics of entering the market, there are several ways.- The first option is rather conservative: for this, experts advise opening a deal after the breakout: you need to wait for a retest of support (or resistance). True penetration happens infrequently: a breakthrough has a sharp character and volume is characteristic of an increase.- A more unsafe method is to enter after the candle is closed outside the pennant in the time interval H1 or H4. Such a risky option involves conducting an operation to direct the main trend at the beginning of the upward wave creation to the breakdown of support (or resistance). Take into account the recommendations, and of course, do not forget about placing orders - stop loss and take profit (on the pennant). Graphical models in technical analysis are used practically on all instruments of the currency market. The pennant shows this well: this figure is very simple and accessible to understanding, but it is extremely effective in trading. Use it when working with it, ideal formations and trade will bring you results.
An important stage associated with the preparation for the installation of orders, it is more rational to start on a 3-4 wave of the figure, or after forming 50% of the triangle. By all the canons of those. analysts, the breakdown happens precisely in this period of model formation.