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FOREX 101:Mastery for Beginner and
Intermediate Traders
Welcome
Day 1
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[ Disclaimer ]
CHIMABUREY.com is an online educational web site only. Information contained throughout the site may be provided by sources that are not affiliatedwith CHIMABUREY.com. The accuracy, reliability of such information is believed to be reliable. However, CHIMABUREY.com does not warrant the
accuracy, completeness, quality, adequacy, or content of any information on our website. Such information is provided as is without warranty or
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not make any representations or warranties, expressed or implied, with respect to the trading information, recommendations, or accuracy or
completeness thereof, including, without limitation, any implied warranties or any warranties of merchantability, timeliness, quality or fitness for a
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Past performances are not necessarily indicative of future results. There is risk involved in futures, options, equities and FOREX trading and it is notsuitable for everyone. The risk of loss in trading can be substantial. Futures trading is highly leveraged and may be illiquid. You should therefore carefully
consider whether such trading is suitable for you in light of your financial condition, financial objectives and needs, financial resources, and other
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FOREX 101:Mastery for Beginner and
Intermediate Traders
The rich invest in time, the poor invest in money.
-Warren Buffet
Introduction
Day 1
Copyright, 2014 Chima Burey.
All rights reserved.
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[ Introduction ]
What you will learn, and what to expect from Day 1:
- FOREX Foundations
- FOREX Terminology and Market Structure
- Currency Pairs
- What is a PIP?
- Understanding a Currency Chart
- How to read a chart
- Different types of charts
- Understanding Candlesticks
- 13 bars to success
- Law of Momentum
- The 4 trading time frames
- The 3 analytical timeframes
- Moving Averages
- Continuation: The Power of Follow Through- Understanding market movement
- Pivot Highs and Pivot Lows
- Trailing Stops: How to lock in profit
- Spotting the three market trends
- Q&A
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FOREX 101:Mastery for Beginner and
Intermediate Traders
FOREX FoundationsDay 1
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All rights reserved.
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[ FOREX Foundations ]
What is FOREX?
FOREX means Foreign Exchange Market and it is a global market
where world currencies can be traded against its other.
The FOREX market is huge, with daily volumes of about four trillion
dollars. It is the most liquid financial market in the world.
FOREX currencies fluctuate according to actual monetary flows, but
additionally according to anticipations about global economic
conditions.
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[ FOREX Foundations ]
The History of FOREX?
Prior to 1971, speculation was not permitted in the currency markets due
to something called the Bretton Woods Agreement.
The Bretton Woods Agreement was set up in 1945 with the purpose of
stabilizing international currencies and preventing money fleeing across
nations.
This agreement fixed all national currencies against the dollar and set the
dollar at a rate of $35 per ounce of gold.
In 1971, the Bretton Woods Agreement was finally abandoned, and theUS dollar was no longer convertible to gold.
By 1973, currencies of the major industrialized nations were floating
more freely, helped by the forces of supply and demand.
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[ FOREX Foundations ]
The History of FOREX?
Prices were set, with volumes, speed and price volatility, all increasing
during the 1970s. This guided the way to new financial instruments,
market deregulation and open trade. It also led to a rise in the power of
speculators.
Accelerated with the arrival of computers during the 1980s, the
movement of money across borders became a continuum, trading
through the Asian, European and American time zones.
The big banks created dealing rooms where hundreds of millions of
Dollars, Euros, Pounds and Yen were exchanged within minutes.
Today electronic brokers trade daily in the FOREX market.
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[ FOREX Foundations ]
The History of FOREX?
The market has changed considerably with the majority of international
financial transactions being carried out not just to buy and sell goods but
to speculate on the market with the intention of most dealers being to
make money out of money.
London has developed to become the worlds leading international
financial center and is the worlds largest FOREX market. This occurred
due to its location, operating during the American and Asian markets, as
well as its creation of the Euro-Dollar market.
The Euro-Dollar market was created during the 1950s when Russia's oil
revenue, which was all in US dollars, was deposited outside the US withthe concern of being frozen by US authorities.
By 1996, FOREX trading became more practical when new market makers
took advantage of developments in web-based technology.
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[ FOREX Foundations ]
Who Participates in the FOREX Market?
FOREX market incorporates many different types of participants, the most
important are:
1. Central and Commercial Banks
2. International Trade Companies
3. FOREX Brokerage Companies
4. Large, Medium and Small Institutions (Investment Companies, Hedge Funds)
5. Common Retail Traders
6. World Travelers
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[ FOREX Foundations ]
FOREX Market Hours?
Usually, the best time to enter FOREX markets is when large volumes of currencies
are being traded. At those hours, traders can take full advantage of FOREX
benefits.
Since the FOREX market trades 24 hours a day, the best time to enter is whenseveral countries are trading at the same time. In each time zone across the world,
FOREX markets operate from 8am to 4pm.
So, to take advantage of heavy trading volume, its worthwhile to determine when
the FOREX market hours in different countries overlap. The more countries
actively trading, the larger the trading volume and the bigger the PIP movements.
When currencies are the most active, thats when traders have a better chance of
making a profit. Slow markets offer little chance of profit and therefore FOREX
traders usually stay away.
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[ FOREX Foundations ]
FOREX Market Hours?
FOREX Trading Hours (EST):
Sydney: 5pm - 1amTokyo: 7pm - 3am
Singapore/Hong Kong: 9pm - 5am
Frankfurt: 2am - 10am
London: 3am - 11am
New York: 8am - 4pm
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FOREX 101:Mastery for Beginner and
Intermediate Traders
FOREX Terminology and Market Structure
Day 1
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All rights reserved.
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[ FOREX Terminology and Market Structure ]
Major Currency Acronyms
GBP = Great British Pound
EUR = Euro
CHF = Confoederatio Helvetica Franc (Swiss Franc)
USD = United States Dollar
CAD = Canadian Dollar
JPY = Japanese Yen
AUD = Australian Dollar
NZD = New Zealand Dollar
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[ FOREX Terminology and Market Structure ]
Common Terms
Ask (Offer) price of the offer, the price you buy for.
Bank Rate the percentage rate at which central bank of a country lends money to the
country's commercial banks.
Bid price of the demand, the price you sell for.
Broker the market participating body which serves as the middleman between retail traders
and larger commercial institutions.
CFD a Contract for Difference special trading instrument that allows financial speculation
on stocks, commodities and other instruments without actually buying.
Commission broker commissions for operation handling.
EA (Expert Advisor) an automated script which is used by the trading platform software to
manage positions and orders automatically without (or with little) manual control.
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[ FOREX Terminology and Market Structure ]
Common Terms
Fed (Federal Reserve) the main regulatory body of the United States of America financial
system, which division FOMC (Federal Open Market Committee) regulates, among other
things, federal interest rates.
Flat (Square) neutral state when all your positions are closed.
Fundamental Analysis the analysis based only on news, economic indicators and global
events.
Gap a difference between the previous period's close price and the next period's open
price. In FOREX usually only occurs during weekends between the Friday's close and the
Monday's open price.
Market Order order to buy or sell a lot for a current market price.
Market Price the current price for which the currency is traded for on the market.
Spread difference between ask and bid prices for a currency pair.
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[ FOREX Terminology and Market Structure ]
Market Structure Hierarchy
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[ FOREX Terminology and Market Structure ]
Centralized Market
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[ FOREX Terminology and Market Structure ]
Decentralized Market
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FOREX 101:Mastery for Beginner and
Intermediate Traders
Currency Pairs
Day 1
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All rights reserved.
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[ Currency Pair ]
What is a Currency Pair?
A currency pair is the quotation of the relative value of a currency unit
against the unit of another currency in the foreign exchange market.
The first currency of a currency pair is called the base currency, while
the second currency is called the counter currency. The currency pair
shows how much of the counter currency is needed to purchase one
unit of the base currency.
USD/JPY
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[ Currency Pair ]
What is a Base Currency ?
The first currency quoted in a currency pair on FOREX. It is also typically
considered the domestic currency or accounting currency. For
accounting purposes, a firm may use the base currency to represent allprofits and losses.
It is sometimes referred to as the "primary currency.
USD/JPY
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[ Currency Pair ]
What is a Quote Currency ?
The second currency quoted in a currency pair in FOREX. In a direct
quote, the quote currency is the foreign currency. In an indirect quote,the quote currency is the domestic currency.
Also known as the "secondary currency" or "counter currency.
USD/JPY
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[ Currency Pair ]
Most Popular Currency Pairs
EUR/USD
GBP/USD
AUD/USD
USD/CAD EUR/JPY
NZD/USD
USD/CHF
USD/JPY
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FOREX 101:Mastery for Beginner and
Intermediate Traders
What is a PIP?
Day 1
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All rights reserved.
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[ What is a PIP? ]
What does PIP mean?
A PIP is a very small measure of change in a currency pair in the FOREX
market.
It can be measured in terms of the quote or in terms of the underlying
currency.
A PIP is a standardized unit and is the smallest amount by which a
currency quote can change, which is usually $0.0001 for U.S. dollarrelated currency pairs, which is more commonly referred to as
1/100th of 1%, or one basis point.
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[ What is a PIP? ]
What does PIP mean?
A retail example:
At your local coffee shop, a cappuccino is sold for $3.49.
However, in the FX market that cup of coffee is quoted
at 3.49000. The change in that fourth decimal point is
called 1 PIP. The 5th and final decimal place measures a
fraction of a PIP.
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[ What is a PIP? ]
Understanding a Currency Quote
AUD/USD
0.89305 0.89396
Youve just completed your first trade of the day, you went
long the AUD/USD currency pair.
How many PIPs did you make?
9.1 PIPs
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[ What is a PIP? ]
Understanding a Currency Quote
Account Types
Micro
Mini
Standard
1K
10K
100K
$0.10
$1.00
$10.00
Contract Size PIP Value
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[ What is a PIP? ]
Understanding a Currency Quote
AUD/USD 0.89305 0.89396
Now that you have calculated how many PIPs, How much money did you make?
In a mini (10k) account, each PIP is worth roughly one unit of the currency in which your
account is denominated. If your account is denominated in USD, for example, each PIP
(depending on the currency pair) is worth about $1.
9.1 PIPs X $1/PIP = $9.10
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[ What is a PIP? ]
Understanding a Currency Quote
Account Types
Micro
Mini
Standard
1K
10K
100K
$0.10
$1.00
$10.00
Contract Size PIP Value
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[ What is a PIP? ]
FOREX Volume vs. Equity Markets?
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[ What is a PIP? ]
Average Daily Range
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[ What is a PIP? ]
Average PIP Range by Day of the Week
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[ What is a PIP? ]
Average PIP Range by Trading Session
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[ What is a PIP? ]
ATR: Asian Session
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[ What is a PIP? ]
ATR: European Session
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[ What is a PIP? ]
ATR: U.S. Session
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FOREX 101:Mastery for Beginner and
Intermediate Traders
Understanding a Currency Chart
Day 1
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All rights reserved.
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[ Understanding a Currency Chart ]
US500 (S&P 500)
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[ Understanding a Currency Chart ]
EUR/USD
Which one is the base currency
and which one is the quote
currency?
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[ Understanding a Currency Chart ]
EUR/USD
EUR: Loses Value
USD: Gains Value
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[ Understanding a Currency Chart ]
EUR/USD
EUR: Gains Value
USD: Loses Value
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FOREX 101:Mastery for Beginner and
Intermediate Traders
How to Read a Chart
Day 1
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[ How to Read a Currency Chart ]
EUR/USD
Base Currency: Euro Dollar
Quote Currency: US Dollar
H4: Bars are displayed in 4 hour segments
Price Quote Order: OPEN HIGH LOW - CLOSE
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[ How to Read a Currency Chart ]
NZD/USD
Base Currency: New Zealand DollarQuote Currency: US Dollar
M15: Bars are displayed in 15 minute segments
Price Quote Order: OPEN HIGH LOW - CLOSE
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FOREX 101:Mastery for Beginner and
Intermediate Traders
Different Types of Charts
Day 1
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[ Different Types of Charts ]
Line Chart
The most basic of the four charts is the line chart because it represents
only the closing prices over a set period of time. The line is formed by
connecting the closing prices over the time frame.
Line charts do not provide visual information of the trading range for the
individual points such as the high, low and opening prices.
However, the closing price is often considered to be the most important
price in currency quote compared to the high and low for the day andthis is why it is the only value used in line charts.
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[ Different Types of Charts ]
Line Chart
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[ Different Types of Charts ]
Bar Chart
The bar chart expands on the line chart by adding several more key pieces of information to
each data point. The chart is made up of a series of vertical lines that represent each data
point.
This vertical line represents the high and low for the trading period, along with the closingprice.
The close and open are represented on the vertical line by a horizontal dash. The opening
price on a bar chart is illustrated by the dash that is located on the left side of the vertical
bar. Conversely, the close is represented by the dash on the right.
Generally, if the left dash (open) is lower than the right dash (close) then the bar will beshaded green, representing an up period for the pair, which means it has gained value.
A bar that is colored red signals that the stock has gone down in value over that period.
When this is the case, the dash on the right (close) is lower than the dash on the left (open).
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[ Different Types of Charts ]
Bar Chart
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[ Different Types of Charts ]
Candlestick Chart
The candlestick chart is similar to a bar chart, but it differs in the way that it is
visually constructed.
Similar to the bar chart, the candlestick also has a thin vertical line showing theperiod's trading range.
The difference comes in the formation of a wide bar on the vertical line, which
illustrates the difference between the open and close. And, like bar charts,
candlesticks also rely heavily on the use of colors to explain what has happened
during the trading period.
When the price of the pair is up and closes above the opening trade, the
candlestick will usually be green. If the pair has traded down for the period, then
the candlestick will usually be red.
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[ Different Types of Charts ]
Candlestick Chart
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[ Different Types of Charts ]
Point and Figure Chart
Conventional technical-analysis charts tend to be the open-close/high-low chart. In the creation
of P&F, the emphasis is only on the closing price of the currency pair. The developers of P&F
charting were interested in trend development and thus were concerned not with the noise
created daily by minor moves up or down, but with the larger picture and how that plays out in
the areas of supply and demand.
The key to P&F charts is the establishment of the unit of price, which is the unit measurement
of a price movement that is plotted on the graph. On P&F charts, there is no time axis, only a
price axis. Rising currency prices are shown with X's and falling prices are shown with O's. These
points appear on the chart only if the price moved at least one unit of price in either direction.
So say the closing prices of the Euro moved up one price unit three times. This would appear as
a column of three X's. If the price movement reverses direction, the chart shows a new columnof O's, wherein an O is plotted for each unit of price movement. X's and O's never appear in the
same column. The chartist, however, must establish how many price units make up a box, which
is how much the price must move in the opposite direction for the chart to begin a new
column.
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[ Different Types of Charts ]
Point and Figure Chart
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FOREX 101:Mastery for Beginner and
Intermediate Traders
Understanding Candlesticks
Day 1
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All rights reserved.
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[ What is a Candlestick? ]
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[ What is a Candlestick? ]
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[ What does it all mean? ]
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FOREX 101:Mastery for Beginner and
Intermediate Traders
13 Bars to Success
Day 1
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[ 13 Bars to Success ]
5 Bullish Candles Found in Trading
Bullish
Wide-Ranging
Bar
Bullsih
Hammer
(Pin Bar)
Bullish
Normal Ranging
Bar
Bullish
Doji
Bullish
Inverted Hammer
(Pin Bar)
Strongest Weakest
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[ 13 Bars to Success ]
Bearish
Wide-Ranging
Bar
Bearish
Inverted
Hammer
(Pin Bar)
Bearish
Normal Ranging
Bar
Bearish
Doji
Bearish
Hammer
(Pin Bar)
5 Bearish Candles Found in TradingStrongest Weakest
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[ 13 Bars to Success ]
Dragonfly
Doji
Standard
Doji
Gravestone
Doji
Strongest Weakest
3 Colorless Candles Found in Trading
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FOREX 101:Mastery for Beginner and
Intermediate Traders
13 Bars to Success : Candlestick Math
Day 1
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[ Candlestick Math ]
HighHigh
LowLow
HighHigh
LowLow
Bulls are in Good control
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[ Candlestick Math ]
HighHigh
LowLow
HighHigh
LowLow
Bulls are in Good control
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[ Candlestick Math ]
HighHigh
LowLow
HighHigh
LowLow
Bears are in Good control
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[ Candlestick Math ]
HighHigh
LowLow
HighHigh
LowLow
Bears are in Good control
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[ Candlestick Math ]
HighHigh HighHigh
LowLowLowLow
Bulls have Weak control
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[ Candlestick Math ]
HighHigh HighHigh
LowLowLowLow
Bulls have Weak control
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[ Candlestick Math ]
Bears have Weak control
HighHigh
LowLow
HighHigh
LowLow
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[ Candlestick Math ]
Bears have Weak control
HighHigh
LowLow
HighHigh
LowLow
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[ Candlestick Math ]
Bulls have Lost control
HighHigh HighHigh
LowLowLowLow
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[ Candlestick Math ]
Bulls have Lost control
HighHigh HighHigh
LowLowLowLow
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[ Candlestick Math ]
Bears have Lost control
HighHigh
LowLow
HighHigh
LowLow
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[ Candlestick Math ]
Bears have Lost control
HighHigh
LowLow
HighHigh
LowLow
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[ Candlestick Math ]
Bulls have Totally Lost control
HighHigh
LowLow100%
HighHigh
LowLow
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[ Candlestick Math ]
Bulls have Totally Lost control
HighHigh
LowLow100%
HighHigh
LowLow
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[ Candlestick Math ]
Bears have Totally Lost control
HighHigh
LowLow
100%
HighHigh
LowLow
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[ Candlestick Math ]
Bears have Totally Lost control
HighHigh
LowLow
100%
HighHigh
LowLow
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[ Candlestick Math ]
Bears have Totally Lost control
HighHigh
LowLow
100%
LowLow
HighHigh
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[ Candlestick Math ]
Bears have Totally Lost control
HighHigh
LowLow
100%
LowLow
HighHigh
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[ Candlestick Math ]
Bulls have Totally Lost control
HighHigh
LowLow100%LowLow
HighHigh
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[ Candlestick Math ]
Bulls have Totally Lost control
HighHigh
LowLow100%LowLow
HighHigh
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[ Exercise: Candle Identif ication ]
What do you see?
1. __________
2. __________
3. __________
5. __________
4. __________
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FOREX 101:
Mastery for Beginner andIntermediate Traders
"I will tell you how to become rich. Close the doors.
Be fearful when others are greedy. Be greedy
when others are fearful.
-Warren Buffet
13 Bars to Success: Excitable Events
Day 1
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All rights reserved.
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[ Excitable Events ]
Its All About Emotion
Understanding how to interpret candlestick pattern is like
learning a new language.
Coupling an event (Candlestick Patterns) along with a
location (Support and Resistance) gives the trader the
best opportunity to read the emotion of the market.
There are certain Candlestick patterns that indicate serious
cash flow in the market. These are the key to understandingmarket direction.
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[ Excitable Events ]
Its All About Emotion
Bullish Bearish
Excitable Events are always 2-3x bigger that the average size candle
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[ Exercise: Exci table Events ]
Which ones are
Excitable Events?
1
2
3
4
5
6
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[ Excitable Events ]
Its All About Emotion
Cash flow and volatility rule the markets. Candlesticks help with
understanding the amount of fear and greed thats currently in
the market.
Spotting exactly when these emotions take place are vital to getting
into a trade before its too late.
Remember: Seeing greed gets you into the market, recognizing fear
gets you out.
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[ Excitable Events ]
Its All About EmotionCan you spot the fear and
greed?
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[ Excitable Events ]
Its All About EmotionGREED
FEAR
The gap in the priceaction show the
aggressiveness of the
buyers.
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[ Excitable Events ]
Its All About EmotionGREED
FEAR
Notice: Back-to-back excitable
events at the end of a run is asign that the current trend
may be in trouble.
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[ Excitable Events ]
GREED
FEAR
1
2
3
4
5
6Exercise: Describe what
makes each event important.
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FOREX 101:Mastery for Beginner and
Intermediate Traders
Law of Momentum
Day 1
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All rights reserved.
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[ Law of Momentum ]
Something to Remember
Sir Isaac Newton postulated that a body in motion will tend to
stay in motion until it is acted on by an outside force.
While Newton's law is inextricably tied to physics, it can be
applied to financial markets as well. Your financial investments
don't exist in a vacuum.
They are constantly acted on by outside forces that create price
movements, either up or down. Momentum refers to the speedof a currency pair's price movements.
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[ Law of Momentum ]
What to look for
1) Major market events (i.e. Wide Ranging Bars, Hammers, Inverted Hammers, etc. )
2) Does the market continue with its bias?
3) If it doesnt, then be ready for a directional shift in the opposite direction.
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[ Law of Momentum ]
Can you spot the areas of momentum?
[ L f M ]
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[ Law of Momentum ]
1
2
3
4
5
6
7
8
9
Can you spot the areas of momentum?
Discussion
[ L f M t ]
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[ Law of Momentum ]
Can you spot the areas of momentum?
[ L f M t ]
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[ Law of Momentum ]
Can you spot the areas of momentum?
1
2
3
4 5
Discussion
6
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FOREX 101:Mastery for Beginner and
Intermediate Traders
The Four Trading Time Frames
Day 1
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All rights reserved.
[ Th F T di Ti F ]
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[ The Four Trading Time Frames ]
M5: 5 Minute
M15: 15 Minute
M30: 30 Minute
H1: 1 Hour
Used by many active traders (day-traders) to
capture the volatility intra-day market movement.
This chart allows traders to utilize intra-day volatility
without the speed of the lower time-frames.
This time frame is the perfect middle ground
between finding intra-day trades and trades that
can held overnight.
Perfect for traders who look to take advantage of
market moves that range from 1-5 days.
[ M5 5 Mi t Ch t ]
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[ M5: 5 Minute Chart ]
EUR/USD
Discussion: Using volatility
to your advantage.
[ M15: 15 Minute Chart ]
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[ M15: 15 Minute Chart ]
GBP/USD
Discussion: What do you notice?
[ M15: 15 Minute Chart ]
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[ M15: 15 Minute Chart ]
GBP/USD
Discussion: What do you notice?
[ M30: 30 Minute Chart ]
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[ M30: 30 Minute Chart ]
S&P 500
Discussion: What stands out to
you? And why?
[ M30: 30 Minute Chart ]
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[ M30: 30 Minute Chart ]
S&P 500
Discussion: What stands out to
you? And why?
[ H1: 1 Hour Chart ]
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[ H1: 1 Hour Chart ]
EUR/JPY
Discussion: What happens whenthe momentum runs out?
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FOREX 101:Mastery for Beginner and
Intermediate Traders
The Three Analytical Time Frames
Day 1
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All rights reserved.
[ Three Analytical Time Frames ]
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D1: Daily
W1: Weekly
H4: 4 HourThis chart is great from analyzing short to mediumterm trades. Many traders actually use this as a
trading time frame as well. It is very versatile to
understand price action during weekly trends.
The daily time frame is a must for all traders.
Understanding daily market emotion is key to day
traders and long term traders alike. This chart is
rarely used by retail traders as a trading time frame.
Every week should start and end with this time
frame. The ability to recognize setups from thischart will greatly improve the trading decisions on
the lower time frames.
[ Three Analytical Time Frames ]
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FOREX 101:Mastery for Beginner and
Intermediate Traders
Moving Averages
Day 1
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All rights reserved.
[ Moving Averages ]
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[ Moving Averages ]
Among the most popular indicators used in technical analysis, moving
averages are used to gauge the direction of the current trend. This
indicator is so widely used because it helps to smooth out price action
by filtering out the noise from random price fluctuations.
Every type of moving average is a mathematical result that is calculated
by averaging a number of past data points.
Once determined, the resulting average is then plotted onto a chart in
order to allow traders to look at smoothed data rather than focusing onthe day-to-day price fluctuations that are inherent in all financial
markets.
What are they?
[ Moving Averages ]
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[ Moving Averages ]
Before
[ Moving Averages ]
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[ Moving Averages ]
After
Discussion: Which one do youprefer?
[ Moving Averages ]
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[ Moving Averages ]
After
Discussion: Use the MAs asfloating support and resistance,
NOT for the crossover!
[ Moving Averages ]
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[ Moving Averages ]
How to use the MAs?
The most common applications of Moving
Averages are to:
1) Identify the trend direction.
2) Determine support and resistance levels.
Which MAs to use?
1) Fast: 8ma
2) Slow: 20ma
3) Long Term: 200ma
[ Moving Averages ]
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8 period MAThe 8ma is great for catching fast moving aggressivetrends. This fast moving average is the one that is
often closest to price action and reacts the fastest
to temporary directional changes.
This moving average is known for being more of a
trend following guide. When price breaks the 8mait often finds stability in the trend at the 20ma.
The most popular moving average is the 200ma.
This is used by both retail and institutional traders
alike. Given the amount of data that is used to
calculate this average, price action often reacts toviolently any encounter with this moving average.
[ Moving Averages ]
20 period MA
200 period MA
** All Moving Averages are simple Moving Averages **
[ 8-period Moving Average ]
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[ 8 period Moving Average ]
8ma
20ma
NOTICE: How price action hugs
the 8ma as it aggressively higher.
GBP/AUDHourly
[ 8-period Moving Average ]
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[ 8 period Moving Average ]
8ma
20ma
NOTICE: Price rides the 8ma for
1.5 years on this chart before it
falls to secondary support levels.
USD/JPYWeekly
[ 20-period Moving Average ]
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[ 0 pe od o g e age ]
8ma
20ma
NOTICE: How the 20ma holds
price down as it continues alongits bearish move toward lower
prices.
EUR/JPY
15 min
[ 20-period Moving Average ]
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[ p g g ]
8ma
20ma
EXERCISE: Candlestick Identification
1._______________________
2._______________________3._______________________
4._______________________
XAG/USD
4 Hour
1
2
3
4
[ 200-period Moving Average ]
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[ p g g ]
8ma
20ma
NOTICE: The reaction to the
200ma from price.
AUD/USD
1 Hour
200ma
1
2
34 5
[ 200-period Moving Average ]
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[ p g g ]
8ma
20ma
Lesson: Timid and Forceful
interactions between price and
the 200ma.
Dow 3030 min
200ma
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FOREX 101:
Mastery for Beginner and
Intermediate Traders
Continuation: The Power of Follow Through
Day 1
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All rights reserved.
[ The Power of Follow Through ]
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[ g ]
A temporary reversal in the direction of a currency pair's price that goesagainst the prevailing trend.
A retracement does not signify a change in the larger trend. On a chart
where a currency pair's price is generally headed upward, retracements are
the small dips in price that the stock experiences during its overall upward
trend.
What is a Retracement?
[ The Power of Follow Through ]
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[ g ]
Technical analysts make an important distinction between retracements
and reversals.
Retracements are short-term changes within a longer-term trend, whilereversals indicate the end of a larger trend and the beginning of a new
trend.
When a retracement first begins, it is difficult to tell whether it is a
retracement or a reversal.
Technical analysts try to distinguish between the two using Fibonacci
retracements, pivot points, trendlines, and moving average support and
resistance levels.
What is a Retracement?
[ The Power of Follow Through ]
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?
List 3 types of support that
would cause price action to
stop its retracement.
1) ___________________
2) ___________________
3) ___________________
[ The Power of Follow Through ]
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?
List 3 types of candlestick
formations that you would
look for to signify that the
trend might continue?
1) ___________________
2) ___________________
3) ___________________
[ The Power of Follow Through ]
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8ma
20ma
NOTICE: After price action
moves above the movingaverages, they act as support to
maintain the up-trend.
CHF/JPY
1 Hour
Moving Average Support
[ The Power of Follow Through ]
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8ma
20ma
NOTICE: Price action uses all 3
major moving averages for
support during this up-move.
FTSE 100
4 Hour
Moving Average Support
200ma
[ The Power of Follow Through ]
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8ma
20maMomentum: Stacked WRB kicks
start the move lower which was
maintained by the decliningmoving averages.
AUD/NZD
1 Hour
Moving Average Resistance
[ The Power of Follow Through ]
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8ma
20maCandlestick Math: This moves
begin with a series of bearish
candle formations which leads tobig gains.
USD/JPY
5 min
Moving Average Resistance
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FOREX 101:
Mastery for Beginner and
Intermediate Traders
Understanding Market Movement
Day 1
Copyright, 2014 Chima Burey.
All rights reserved.
[ Understanding Market Movement ]
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8ma
20maCandlestick Math: This moves
begin with a series of bearish
candle formations which leads tobig gains.
USD/JPY
5 min
Spott ing the Signs of a Market Reversal
[ Understanding Market Movement ]
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8ma
20maCandlestick Math: This moves
begin with a series of bearish
candle formations which leads tobig gains.
USD/JPY
5 min
Spott ing the Signs of a Market Reversal
Why is this important?
USD/JPY
5 min
NOTICE: During the
down-trend, price actionpauses 5 times before
making a higher low.
[ Understanding Market Movement ]
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8ma
20maCandlestick Math: This moves
begin with a series of bearish
candle formations which leads tobig gains.
USD/JPY
5 min
Spott ing the Signs of a Market Reversal
USD/JPY
5 min
NOTICE: That after the
higher low, price action
began to prove itself by
settling above the moving
averages
[ Understanding Market Movement ]
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8ma
20ma
Spott ing the Signs of a Market Reversal
USD/CHF
30 min
NOTICE: That after the
WRB, the momentum
stopped and a newdowntrend began. Why
did this happen here?
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FOREX 101:
Mastery for Beginner and
Intermediate Traders
Pivot Highs and Pivot Lows
Day 1
Copyright, 2014 Chima Burey.
All rights reserved.
[ Pivot Highs and Pivot Lows ]
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What are they and Why are they
important?
A price-bar formation that gives real-time price signals of support and resistance.
When a series of price bars reverses direction, it is considered a structural pivot
(not a calculated pivot).
The price bar has an open, high, low and close. The pivot is composed of a
minimum of three bars and occurs in every time frame. The pivot lows and highs
are used to draw trendlines to show support, resistance and trend direction.
Pivot High Pivot Low
[ Higher Highs and Higher Lows ]
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KEY: Recognizing thesubtle transition between
trends can turn in to
huge profits.
AUD/NZD1 Hour
[ Higher Highs and Higher Lows ]
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KEY: Spot where priceaction finds support
and look for distinctive
candlestick formations.
GBP/USD
1 Hour
[ Lower Highs and Lower Lows ]
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KEY: Spot where price
action finds support
and look for distinctive
candlestick formations.
USD/JPY
15 min
[ Lower Highs and Lower Lows ]
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KEY: Spot where price
action finds support
and look for distinctive
candlestick formations.
USD/JPY
15 min
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FOREX 101:
Mastery for Beginner and
Intermediate Traders
Trailing Stops: How to Lock in Profit
Day 1
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All rights reserved.
[ The Importance of Stops ]
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What is a trailing stop?
A stop order that can be set at a defined percentage away from a security's
current market price.
A trailing stop for a long position would be set below the securitys currentmarket price; for a short position, it would be set above the current price.
A trailing stop is designed to protect gains by enabling a trade to remain
open and continue to profit as long as the price is moving in the right
direction, but closing the trade if the price changes direction by a specified
percentage.
[ The Importance of Stops ]
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Why teach about stops before teaching
how to buy?
My two rules of investing: Rule one never lose money. Rule two never forget
rule one.
-Warren Buffet
"The four most dangerous words in investing are: 'this time it's different.
-Sir John Templeton
Capital Preservation
[ The Importance of Stops ]
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Trailing stops and Discipline?
The trailing stop is more flexible than a fixed stop loss, since it
automatically tracks the currency pairs price direction and does not have
to be manually reset like the fixed stop loss.
Like all stop orders, the trailing stop enforces trading discipline by taking
the emotion out of the sell decision, thus enabling traders and investors
to protect profits and investment capital.
[ Trail ing the 20-period MA ]
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USD/JPY
Daily
Notice: The buyers
ability to keep price
action above the MAs
for so long. Why didthis change?
[ Trail ing the 20-period MA ]
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USD/JPY
Daily
Action: Exit position at
the violation of this
low.
[ Trail ing the 20-period MA ]
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Evaluation: How did
the decision to trail the
20ma work out? And
why?
USD/JPY
Daily
[ Trail ing the 8-period MA ]
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Crude Oil
15 min
Notice: After and
aggressive push lower,
Price action finally
moves above the 8ma.
[ Trail ing the 8-period MA ]
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Crude Oil
15 min
Action: Exit position at
the violation of thishigh.
[ Trail ing the 8-period MA ]
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Crude Oil
15 min
Evaluation: How did
the decision to trail the
8ma work out? Andwhy?
[ Trail ing each Candle ]
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CHF/JPY
1 HourNew Rule: Watch for Clearing Bars
after consolidation as they take out
previous highs. This is normally a sign
of a bigger move to come.
[ Trail ing each Candle ]
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CHF/JPY
1 Hour
Notice: Price action
has exploded away
from the MAs.
[ Trail ing each New Candle ]
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CHF/JPY
1 Hour
Action: Exit position at
the violation of this
low.
[ Trail ing each New Candle ]
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CHF/JPY
1 Hour
Evaluation: How didthe decision to trail
using this technique
work out? And why?
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FOREX 101:
Mastery for Beginner andIntermediate Traders
Spotting the Three Market Trends
Day 1
Copyright, 2014 Chima Burey.
All rights reserved.
[ The Three Market Trends ]
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Up-Trends
As price action moves higher, it has distinctive
characteristics. The chart will make a series of higher
highs and higher lows. The strength of the move with be
seen by which of the two MAs it respects. If it hugs the
8ma it is a more aggressive move than those that only hug
the 20ma.
This type of trend is one where price consolidates with
equal highs and equal lows. I have nicknamed this areas
as the trenches. It is important to what to look for
during this type of trend.
Down-Trends
Sideways-Trends
As price action moves lower, it has distinctive
characteristics. The chart will make a series oflower highsand lower lows. The strength of the move with be seen
by which of the two MAs it respects. If it hugs the 8ma it
is a more aggressive move than those that only hug the
20ma.
[ Up-Trend 8ma ]
7/21/2019 FOREX101 Day1
163/171
Copyright, 2014 Chima Burey. All rights
reserved.
Discussion: What
happened here?
What type of trend is this?
Normal or Aggressive
GBP/USD
1 Hour
[ Up-Trend 20ma ]
7/21/2019 FOREX101 Day1
164/171
Copyright, 2014 Chima Burey. All rights
reserved.
Discussion: What
happened here?
What type of trend is this?
Normal or AggressiveWhat type of trend is this?
Normal or Aggressive
FTSE 100
4 Hour
[ Down-Trend 8ma & 20ma ]
7/21/2019 FOREX101 Day1
165/171
Copyright, 2014 Chima Burey. All rights
reserved.
Discussion: What
happened here?
AUD/NZD
Daily
[ Sideways-Trend The Trenches ]
7/21/2019 FOREX101 Day1
166/171
Copyright, 2014 Chima Burey. All rights
reserved.
Discussion: What
happened here?
AUD/NZD
Daily
Discussion: This example
has a consolidation area
with a downward bias.
How would you trade
this?
Crude Oil
4 Hour
[ Sideways-Trend The Trenches ]
7/21/2019 FOREX101 Day1
167/171
Copyright, 2014 Chima Burey. All rights
reserved.
Discussion: What
happened here?
AUD/NZD
DailyCrude Oil
4 Hour
Step 1: Identify
consolidation area
[ Sideways-Trend The Trenches ]
7/21/2019 FOREX101 Day1
168/171
Copyright, 2014 Chima Burey. All rights
reserved.
Discussion: What
happened here?
AUD/NZD
DailyCrude Oil
4 Hour
Step 2: Pull back
and look at the
overall picture to
find clues.
7/21/2019 FOREX101 Day1
169/171
[ Sideways-Trend The Trenches ]
7/21/2019 FOREX101 Day1
170/171
Copyright, 2014 Chima Burey. All rights
reserved.
Discussion: What
happened here?
AUD/NZD
DailyUSD/CAD
4 Hour
Step 1: Identify
consolidation area
[ Sideways-Trend The Trenches ]
7/21/2019 FOREX101 Day1
171/171
Discussion: What
happened here?
AUD/NZD
DailyUSD/CAD
4 Hour
Step 2: Pull back
and look at the
overall picture to
find clues.