EU official: Technical Brexit extension not needed from EU side

It would matter if the deal passes parliament

It’s not clear if a full legal text will be ready on Saturday or just a political declaration. If the text isn’t done it makes a deal less likely because members of the ERG said they won’t support it. However if it passes anyway, there may not be enough time to get it done and/or to implement a deal.

The EU is saying here is that business could continue as normal until that’s worked out and that the deal would go into place when it’s ready.

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How Technical Analysis Beat Black Monday

Milton Berg, CIO of Milton Berg Advisors, tells Grant Williams (NYSE:) how his investment process β€” which focuses on psychology and technical analysis β€” allowed him to brace for the 1987 market crash. This clip is excerpted from a video published on Real Vision on July 10, 2019 entitled β€œThe Turning Point Master.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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A better understanding of technical analysis and related indicators

We’re focusing on technical analysis in this article with a description of some of the important indicators

LegacyFX

We could say, all wealthy traders use technical analysis but not all technical analysis traders are wealthy although technical analysis (TA) is the most precise way of trading the Forex market.

It’s also useful note that fundamentals play their part in indicating whether a price will move up or down. It gives you the edge over other traders.

Technical Analysis is so powerful because of a few reasons:

1) It represents numbers. All information and its impact on the market and traders is represented in a currency’s price.

2) It helps to predict trends and the foreign exchange market is very ‘trendy’.

3) Certain chart patterns are consistent, reliable and repeat themselves. TA helps us to see them.

Here’s one way of putting technical analyses into perspective (wish I had a dollar each time I said ‘technical analysis’). We all know that prices move in trends.

Research has shown that those that trade ‘with the trend’ greatly improve their chances of making a profitable trade.

Trends help you become aware of the overall market direction and often rescue us from less than profitable entry points. I attended a 2-day course costing me over $ 2500 AUD and the biggest thing I learned from it was the need for discipline and emotional control.

The content was so basic that within the next 3 or 4 articles, I would have covered all of it. So, learning the ‘tools of the trade’ the technical indicators and their applications will help you to diagnose what the market is doing but even then, you need to expect ups and down and trade with emotional control.
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Stay with the trend, follow the price

Find the price of the currency pair. If EUR/USD is 1.4224 and moves to 1.4180 then 1.4090 then the market is in a down trend. Concern yourself only with what the market IS doing not what it might do. Listen to the markets and the indicators will back up what they are telling you.

Moving averages

Tell you the price at a given point of time over a defined period of intervals. They are called moving because they give you the latest price while calculating the average based on the selected time measure.

They lag the market so to give you an indication of a change in trend, use a shorter average such as a 5- or 10-day moving average. By combining a shorter term and longer-term MA you can detect a buy signal when the shorter term crosses the longer-term moving average in the upward direction.

Or a sell signal if it crosses in a downward direction. For example, you could use a 5 day versus a 20-day moving average or a 40 day versus a 200 day moving average.

There are simple moving averages, linearly weighted which gives more importance to the recent prices or exponentially weighted. The latter is a favorite because it considers all prices in a time period but emphasizes the importance of the most recent price changes.

MACD

Based on moving averages, a MACD plots the difference between a 26 exponential moving average and a 12-day exponential moving average, with a 9 day used as a trigger line. If a MACD turns positive when the market is still plummeting it could be a strong buy signal. The converse also works.

Bollinger bands (sounds like an elastic band)

Prices tend to stay between the upper and lower bands. They widen and become narrower depending on the volatility of the market at the time.

A sell signal would be when the moving average is above the Bollinger bands and vice versa for a buy signal. Some traders use it in conjunction with RSI, MACD, CCI and Rate of Change.

Fibonacci retracement

Describe cycles found throughout nature and when applied to technical analysis can find shifts in the market trends. After a climb prices often retrace a large portion sometimes all of the original move. Support and resistance levels often occur near the Fibonacci retracement level.

RSI

Relative Strength Index measures the market activity to see whether it’s overbought or oversold. This is a leading indicator so helps to indicate what the market is going to do (awesome!). A higher RSI number indicates overbought (so expect a bearish shift) and a lower number indicates oversold.

Successful traders will generally use 3 or 4 signals to provide a more conclusive signal before entering a trade.

Always remember, “If in doubt, stay out!”. Technical analysis doesn’t factor in political news, a country’s economic profile or fundamental supply and demand.

Technical Analysis helps us figure out how much money to risk on a trade. How and when to enter the market and how to exit the trade for profit or to minimize loss.

This article was written by LegacyFX.

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The famous classical technical chart patterns

A look into the more familiar patterns on the chart

ICMThis article was submitted by ICM.com.

Technical analysis is a type of analysis which is applied by traders on different financial assets, where they study the past price performance of a certain financial asset to forecast the future price direction or trend of this asset.

There are numerous ways of analyzing the markets via technical analysis. Some traders might use technical indicators and oscillators, while others prefer to use the price action itself.

According to the Dow Theory, the market discounts everything. In other words, the price of a certain financial asset discount all the past, current, and even future economic releases, events, etc.

So by studying the price action of a certain financial product, traders will be searching for repeated price patterns which could assist them in determining the future direction of the market.

In this article, we will cover the classical chart patterns which are to split into two categories: trend continuation patterns and trend reversal patterns.

Continuation Patterns

They are considered as a pause in the prevailing trend which implies that during an uptrend, the bulls are preparing for another push higher whereas during a downtrend, the bears are preparing for another push lower.

These patterns should be drawn properly by traders and they should be very patient while trading the breakout of such patterns to avoid being trapped in false breakouts. Usually, when these patterns take more time to form, they will be followed by significant price movements.

Triangles fall under the category of continuation patterns and are of three types: symmetrical, ascending, and descending.

A symmetrical triangle is formed of higher lows and lower highs which usually signals that the market is balanced and ready to move either way. As the triangle is being formed, the volume shrinks, and the breakout would be accompanied with great volume which leads the market to the next move.

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An ascending triangle is usually considered as a bullish pattern which forms in an existing uptrend. It consists of a horizontal line combining the highs or resistance points, and a line combining a series of higher lows.

Despite the fact that the breakout could occur to either direction, traders usually await a break to the upside as the triangle is a continuation pattern which means that the market had a slight consolidation to prepare for an upcoming price move within the same direction of the prevailing trend.

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A descending triangle is considered as a bearish structure which forms in an existing downtrend. It consists of a horizontal line combining the lows or support level and a line combining a series of lower highs. Traders will be waiting for a break to the downside as they believe that the market took a pause from the prevailing trend and the trend will resume when we breakout from this consolidation pattern.

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Reversal Patterns

Reversal patterns are patterns that occur at the end of a prevailing trend to give a signal to the trader that there could be a possibility of a change in direction. In other words, these patterns will help us indicate that the current price movement has topped or bottomed.

If a trader was holding buy positions in an uptrend, and he detected the formation of a possible reversal pattern, then he should be thinking of liquidating his position and re-assess his bias. Among the most recognized classical reversal patterns are the head and shoulders formations, the double top & bottom, and the triple top & bottom.

Head and Shoulders patterns consist of three peaks with the middle peak being the highest, the left and right peaks holding similar or close price levels. The volume will be the largest in the first shoulder and starts to decrease until we break out from this formation.

A Head and Shoulders pattern will appear at the top of an uptrend, while an inverted head and shoulders pattern will form at the bottom of a downtrend.

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Double/Triple tops and bottoms are among the most reliable reversal chart patterns and can be found easily on charts. Usually, they are formed when the price of a financial asset retests a resistance or support zone without being able to break above or below respectively.

Some traders add technical oscillators such as the Relative Strength Index and search for divergence to confirm their trading setup.

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If we go over charts of different time frames or even range charts, we will be able to find a classical chart pattern, whether from the mentioned above or the rest. However, it is always better to adopt the formations that occur on higher time frames taking into consideration the length, uniformity, and clarity.

Traders should always be cautious about being stuck in a false breakout. In order to avoid such entries, a trader should make sure that the breakout is occurring with heavy volume, or ignore the initial breakout and wait for a retest to the neckline/support/resistance and jump into a trade. Chart patterns will help you pick your trades.

Many traders wait for such formations to trade which would lower their number of trades and also reduce the percentage of losing trades.

Despite the theory that price discounts everything, it is better to always apply fundamental analysis along with technical analysis. When a technical trading setup matches the fundamental analysis findings, the trade would have a higher chance of success.

Finally, we advise all traders to stick to strict risk management techniques as risk management is the key to successful trading.
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