Technical figures as a reliable asset analysis tool

  • 0

Technical figures as a reliable asset analysis tool

Category : Robots

Each trader has his own tools for financial asset analysis, which are combined into a single trading strategy. It is the way the analysis will directly influence on the obtained financial result. Therefore, most fix api traders use classical elements in combination with their approach, because exactly what has been tested by the market for years is able to give a positive result. One such approach is the use of technical figures.

Technical figures are combinations of price quotes that are combined into a set of defined configurations to display a trading signal. These configurations were developed by the majority of market participants and, in the modern interpretation, received tremendous support from stock speculators.

Technical figures can be divided into two key types: trend continuation and reversal.

Figures of trend continuation

Patterns of this category allow you to determine the further trend movement. So, after the impulse growth or decline, a signal can be generated that will indicate the fix api trader that the movement is not over yet and we should expect the price quotes to continue moving to the direction where the price has directed its movement. Technical figures of this category are perfectly combined with signals for channel breakdown or support/resistance levels.

  1. Flag/pennant: these figures are formed in a monotonous manner and are based on an impulse movement, which forms a sharp volatility of the price quotes. After this jump or downturn, a zone of trading is formed, according to which we should expect a growth continuation on the length of the technical figure base.
  2. Triangle: this figure shows the channel narrowing. Quotations of the currency pair should show a consistent decrease in the local maximums, as well as the growth of the local minimums. After the fifth touch of the inclined lines, a breakthrough should occur and the price, according to this technical figure, will be half the length of the beginning of the technical pattern formation. A feature is the ability to set two pending orders (for buy and sell) and enter the trade at any breakdown of the triangle.

Trend reversal patterns

  1. Double bottom/top is formed by double swinging of the same price level. So, if the quotes have reached a minimum and two times have gradually tested these marks, we should expect a retreat from these minima and an increase from the figure’s base to the pivot point (in case of a double bottom). The signals of a double bottom or a vertex are formed identically, but mirror each other.
  2. “Head of shoulders”: the formation of this figure is very similar to the double bottom/top. The only difference is that the formation of this pattern involves three vertices with an explicit peak in the center. The breakdown of the figure’s base will indicate a change in the trend and movement, which will be equal to the length from the central peak to the base of the figure.
  3. Pin bar ( ): a reversal combination that can indicate to the trader at what moment a power shift occurred in the fix api forex market. Formation is formed when quotes close below the opening price after intensive daily growth (signal for sale on the daily schedule) or after the price of the asset closes above the opening price after an intensive daily decline (buy signal on the daily schedule). This signal is in disagreement with the trend, so you should set short levels of loss fixing.

All these signals can be combined into a single trading strategy, and they will perfectly fit in combination with other elements of analysis. Moreover, the use of these figures is possible in the algorithmic trading ( ), which improves the quality of trading and increases the financial result. Therefore, I strongly recommend that everyone takes a closer look at this classic element of financial assets analysis.

Leave a Reply

Contact Us

Recent Comments