The top chart patterns for forex trading - Net Newsledger

The top chart patterns for forex trading - Net Newsledger


The top chart patterns for forex trading - Net Newsledger

Posted: 25 Jul 2019 10:43 AM PDT

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If you want to advance your trading career, one of the key things you need to learn is chart patterns and how to interpret them. Having a good understanding of these patterns will help you know when a trend is starting or ending, and when to start and end a trade. All you need to do is to find a suitable forex and CFD broker and use their charting platforms to create the patterns. This article will highlight some of the most common chart patterns you need to know.

Double Bottom and Double Tops

The top chart patterns for forex trading

A double bottom is a reversal pattern that happens when a downward trend is starting to move upwards.

As a result, the pattern is useful when initiating buying trades when the asset is moving in a downward trend. To spot it, you first need to identify a downward trend. Second, the asset price should move up, and then move downwards again to the previous low. The example below for the USD/JPY pair shows two double bottom setups.

The double top is the opposite of the double bottom and is used to identify the opportunities to short. An example of double top is shown below.

The top chart patterns for forex trading

Head and Shoulder Pattern

Head and shoulders is a reversal pattern commonly used in uptrend. When it occurs, it usually sends a signal that the price of the asset could reverse. It happens when a peak – shoulder – is followed by a higher peak – head – and then by a lower peak. The neckline is drawn by connecting the lowest points of the two troughs. An example of this pattern is shown below.

The top chart patterns for forex trading

The inverse head and shoulder pattern is used to identify buying signals and is drawn similar to the above example.

Triangle Pattern

The top chart patterns for forex trading

The triangle pattern is a common pattern that is easy to spot. It is used to anticipate when a breakout could occur. There are three types of triangle patterns: symmetrical triangle, ascending triangle, and descending triangle. In a symmetrical triangle, the slope of the price's high and the slope of the low converge in a pattern that resembles a triangle. In this period, the asset makes lower highs and higher lows. As a result, the buyers and the sellers are not yet decided. While not always, the pattern tends to happen ahead of a major release like an interest rates decision. An example of this is shown on the S&P 500 chart below.

The top chart patterns for forex trading

In a descending triangle, there is a string of lower highs, which act the support. The price of the asset tends to form gradual lower highs. This implies that the sellers are starting to gain some ground against the buyers. When this happens, professional traders place trades that are above the upper line. An example of this is shown below.

The top chart patterns for forex trading

The opposite of this is the ascending triangle, which forms when buyers find a resistance level that the buyers can't exceed. As they decide on where to push the price, the price gradually starts to push the price up, creating higher lows.

Rectangle Patterns

As the name suggests, these are patterns where there is an indecision in the market. With this, the buyers have a limit on how high a price can move up while the sellers have a limit on how low the price can go. When this happens, a pattern with horizontal support and resistance level is formed. As a result, the price tends to test the support and resistance levels several times and then breaks out in either direction. An example of this is shown on the 30-minute chart of Brent crude oil shown below.

The top chart patterns for forex trading

Other than this, there are two types of rectangles. The bearish rectangle happens when the price consolidates for a short period during a downtrend. This happens as sellers pause to assess whether the downward trend will continue once more. A bullish triangle on the other hand happens when there is consolidation during an uptrend.

These chart patterns are then classified into three main groups. These groups are: reversal patterns (double top, double bottom, and head and shoulders), continuation patterns (rectangles), and bilateral chart patterns like triangles.

While these are the most common chart patterns, you too can identify and create your patterns. As you will realize, understanding these patterns will make you a better trader.

You may get better forex rates on retail platform - Livemint

Posted: 30 Jun 2019 12:00 AM PDT

Mumbai: The next time you are travelling abroad and need foreign currency, you may not need to pay a premium to the bank or the currency dealer to exchange your notes. You can do so at the inter-bank rate, the lowest rate possible, through FX-Retail, the foreign exchange trading platform notified by the Reserve Bank of India (RBI) for retail participants . Trading on FX-Retail will start from 5 August, though registration for the platform opens from 1 July itself. The platform will be operated by the Clearing Corp. of India Ltd (CCIL).

The platform aims at improving transparency and pricing of forex for retail customers. "Such a mechanism will provide transparency while enhancing competition and lead to better pricing for retail customers. Banks may charge their retail customers a pre-agreed flat fee towards administrative expenses, which should be publicly declared. Overall, this would bring down the total cost faced by the retail customer in the foreign exchange market," the RBI notification said. Here, the term retail customers denotes individuals as well as businesses that, unlike banks, do not have access to the inter-bank forex market. Here's what it means for a retail customer.

The trading platform

At present, retail users who need foreign exchange need to either go to their bank or to a currency dealer to get foreign currency. Usually, customers buying forex from a bank are unaware of the exact exchange rate being offered and the exact amount of charges they are paying. Sudarshan Motwani, founder and chief executive officer, BookMyForex.com, a foreign exchange marketplace, said that the new system could bring transparency to the retail forex market. "Banks today charge you a high and a very un-uniform rate on a forex transaction," he said.

As a consumer, you will have to register on the FX-Retail platform through Fxretail.co.in. You will need to submit your KYC (know your customer) details as well as your bank account details like branch, IFSC code and account number. Based on the funds available in the bank account, banks will set a limit for you to trade. Banks will be able to charge an "administrative charge".

You will also be charged a one-time registration fee of 300 plus GST. The fee for non-individuals is 1,000. While there is no fee for transactions of up to $50,000 in a day, beyond that, 0.0004% of the transaction amount would be charged.

Will it benefit you?

Amitabh Bhatnagar, head , relationships, insignia preferred banking and diplomatic segment, RBL Bank Ltd, said the platform is expected to act as an electronic trading platform. "Retail customer can directly deal on the platform and have access to current rates, thus moving away from negotiating with banks or money changers on price," he said.

However, there could also be some challenges. The limitation that banks could face will be in providing hard currency to buyers. "We have observed that the supply of foreign currency (cash) varies in different cities and regions. Hence, you will see that a dollar available in Mumbai and Bengaluru could be expensive compared to a dollar in Punjab, which sees a lot of inflow of forex. So when you settle a trade, the bank or your nearest nodal branch may or may not have the forex in cash,"Motwani said.

A banker, requesting anonymity, said initially banks would only accept electronic transactions and may not settle trades for hard currency. "But as a corollary to this trade, the bank can facilitate moving that foreign currency to an instrument like a forex card for the consumer (individual)," the banker said.

Bankers are also expecting the platform to be largely used by businesses initially. When volume on the platform picks up, it will become like any other exchange where all buyers could be able to participate, the banker said.

Gaurang Somaiya, research analyst (currency) at Motilal Oswal Financial Services Ltd, said the concern on delivering the foreign exchange in cash is valid. "But when new platforms are introduced, there will be challenges. If I have an urgent need of forex for a trip abroad, I might still have to go to the money exchanger. The system might take a year or more to improve those things. Currency supply chain will also come into play," he said.

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