Filed Under (Forex eBook) by ForexDigg on 01-08-2008
Divergence, which is a term that technicians use when two or more averages or indices fail to show confirming trends, is one of the mainstays of technical analysis. Here’s a new way to use oscillators and divergence as well as methods to locate entry levels during a trend.
Most technical indicators mirror or confirm price movement. When price moves up, the indicator moves up; when price moves down, the indicator moves down. When prices peak, the indicator peaks; and when prices bottom, the indicator bottoms. Sometimes, however, a discrepancy occurs between price and indicator movement. That discrepancy is known as nonconfirmation and can be seen most clearly on overbought or oversold indicators as well as on indicators that move above or below a zero line.
Many traders only learn to recognize the type of nonconfirmation that occurs at market tops and bottoms, which is the classic divergence. But there are other forms of nonconfirmation I call hidden divergence (HD) that, when present, offer additional profit potential.
Read the rest of this entry »
Price action is the foundation of all technical indicators, yet most traders do little to understand it. Within trades, price action creates the most important element of context, defining inflection points that affect market entry and exit. The sophisticated investor understands price action and uses it to frame every trading decision.
ANALYSIS
• How likely is a price move continuation given varying conditions?
DATA
• See the probability of price move continuation in assorted tables.
ACTION
• Use breakouts to incorporate price action probabilities.
• Implement price action informed strategies in your trade exits.
RELATED MATERIAL
Test-drive FX Engines for free online at www.fxengines.com to see the power of system building, system testing, and system automation.
ABOUT THIS REPORT
The Forex Report is a periodic publication that investigates advanced strategies for superior trading performance in the foreign exchange markets. These reports utilize advanced statistical and econometric modeling techniques to create new insight into the trading strategy of the average trader. This Data Brief, Predicting Price Action, is intended for traders with moderate forex trading experience and technical analysis understanding.
Read the rest of this entry »
Filed Under (Forex eBook) by ForexDigg on 31-07-2008
Woodies CCI Trend (trend): A trend is established any time the CCI (black line) is either over or below the zero-line (ZL) for six or more time bars. If the CCI trades on the other side of the ZL this does not negate the trend. If above, trend is up, if below, trend is down. The word trend is used in bold print throughout this text when referring to Woodie’s definition.
Amplification;
Defines the trend using the CCI indicator only
Does not use price bars to define trend
Does not use any moving average to define trend
Does not use a larger time frame to define trend
Uses the same chart to define trend as to spot a CCI pattern for the market
Each market will have its own trend.
It is not to be considered when taking a trade on another market. You do not need any other charts, markets or indicators to see and define the trend. When learning Woodie’s CCI system, Woodie recommends that you trade with the trend. You do not trade counter-trend trades until you have learned the trade trend patterns first.
Read the rest of this entry »
