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The trend markets.

To follow a trend, not to try to gain money for price little changes, to concentrate on correct entry in the market at the good price. If an item is good, adhere to it so long, how much it is possible. If the item contradicts a trend, develop it in conformity with a trend.

The range markets.

The range markets tend to try to convince short-term investors that they have almost infringed upon the items. It is necessary to trade at levels of strong interest to purchase (support) and to sale (resistance) – so-called levels of support and resistance accordingly – and to develop the item every time when it is infringed top or a hurdle rate.

Samples of behavior

As a rule it happens difficultly to advance a turn point on a trend line. Lower you will see variants of behavior of the price.

Flag – a flag upward or downward (wedge).

Triangle – descending / ascending / a symmetric triangle.

Double top or double hollow.

Threefold top or threefold hollow.

Change the Head and Shoulder or the return the Head and Shoulder.

Crack is a usual crack (Breakaway) / run out of control / an exhaustion.

Index of relative force (RSI)

The index of relative force is a comparison of average for some period of the maximum (up-close) prices of closing and averages for the same period of the average lowest (down-close) closing prices. The closing price is the maximum, if it is above, than the price of closing of a previous day. The closing price is the lowest, if it is below the price of closing of a previous day.

RSI enters into the formula giving to us this index on a vertical axis in a range from 0 to 100. If it is above 70, in the market is overbuying. At 80 – the market is considered optimistic (bullish). If RSI is lower than 30, in the market is overselling. At significance of an index 20 – the market is pessimistic (bearish).

Divergence – when RSI increases, the price moves downwards and on the contrary. It is the strong indicator of a rotary point of the market.

Versions of diagrammes

1. Columnar diagrams – show maximum, minimum and the closing price.

2. Linear diagrams – show the closing price.

3. Dot-numerical chart – price movement.

Volume and opening volume. Volume – total of trading activity (total of the executed contracts). Opening volume – total of the outstanding contracts concluded by buyers and sellers (not their sum).

Diagrams are built each 5 minutes, hour, day, week, and month.

Support and resistance levels.

Support – support area is a price range in which is possible the increase of the demand for currency (overflow area).

Resistance – resistance area is a price range characterized by increasing pressure towards sale. When to resistance area get from above, it becomes the nearest area of support for the further decrease.

Indicators.

Indicators allow to advance trends and their points of turn. They are more objective, than diagrams and are capable to ensure deeper understanding of balance of bulls and bears. The problem consists that indicators often contradict one another. Any of them work well on trend markets, while others – on range markets. One trace well turn points, others – trends.

It is important to gather as much info about Forex market as possible. Because this knowledge will help you not to lose much money on Forex trading or Forex investment.

Surely not a single piece of knowledge can be a 100% guarantee against losses, in particular on Forex market, but sometimes even one Forex books can be of big service to you.