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Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
Eliminating5mistakes
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Eliminating5mistakes

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  • 1. Eliminating Five Basic Mistakes from your Analysis Simple rules to avoid loss making trades Ian Copsey – FX-Strategy
  • 2. Trend lines
  • 3. Trend lines Even professional traders have the habit of drawing as many lines as they can on their charts So how many do they have to draw and how do they decide which ones will work?
  • 4. Trend lines
  • 5. Trend lines The main error is that they do not identify trends and work on a hit and miss basis Look at what happened next:
  • 6. Trend lines
  • 7. Trend lines Q. What is the definition of a trend? A. Uptrend: A sequence of higher highs and higher lows Downtrend A sequence of lower lows and lower highs
  • 8. Trend lines
  • 9. Trend lines Three Touch Guideline Anyone (and generally everyone including my dog) can draw a line between two highs or two lows This is my dog ☺ By waiting for three touches the trend line becomes stronger and more reliable
  • 10. Trend lines
  • 11. Trend lines
  • 12. Trend lines
  • 13. Trend lines
  • 14. Trend lines
  • 15. Trend lines IF YOU CAN’T DRAW A TREND LINE THEN DON’T FORCE YOURSELF Actually they happen infrequently!
  • 16. Double Tops and Bottoms Double Top Double Bottom
  • 17. Double Tops and Bottoms Are associated with bullish or bearish sentiment that fails to be fulfilled The period of sideways consolidation between extremes and peak/trough will generally cause confusion
  • 18. Double Tops and Bottoms Target Measurement Minimum Target Establishing a minimum target for the pattern
  • 19. Double Tops and Bottoms
  • 20. Double Tops and Bottoms
  • 21. Double Tops and Bottoms
  • 22. Double Tops and Bottoms
  • 23. Double Tops and Bottoms Q. Why didn’t these Double Tops work??? A. Because they weren’t Double Tops Double Tops and Bottoms require confirmation…
  • 24. Double Tops and Bottoms Break confirmation Confirmation comes on break of the trough/peak
  • 25. Double Tops and Bottoms
  • 26. Double Tops and Bottoms
  • 27. Double Tops and Bottoms
  • 28. Double Tops and Bottoms
  • 29. Double Tops and Bottoms
  • 30. Heads and Shoulders Head Shoulder Shoulder Retest of neckline Neckline Neckline Retest of neckline Shoulder Shoulder Head
  • 31. Heads and Shoulders Head & Shoulders represent a slowing of momentum after a trending move They should develop with a broad trending sentiment (uptrend or downtrend) which should be sustained during development of the pattern
  • 32. Heads and Shoulders Extend from point of break Measure peak to neckline Minimum target Establishing a minimum target for the pattern
  • 33. Heads and Shoulders
  • 34. Heads and Shoulders
  • 35. Heads and Shoulders
  • 36. Heads and Shoulders Failures do occur and positions need to be managed closely Generally the neckline should act as support/resistance after penetration though occasionally there can be slight penetration
  • 37. Heads and Shoulders
  • 38. Heads and Shoulders
  • 39. Heads and Shoulders
  • 40. Momentum A favorite indicator type is momentum in one form or another. These are often utilized as overbought/oversold signals but quite often are misunderstood. If they are misused losses can result.
  • 41. Momentum
  • 42. Momentum
  • 43. Momentum Why did RSI & Stochastics fail in USDJPY for so long? Basically there was a strong uptrend and momentum studies are not intended to be used in trending markets
  • 44. Momentum How can we protect ourselves against entering against the trend? Use another indicator that identifies trends
  • 45. Momentum
  • 46. Momentum As ADX/ADXR are rising, generally above 30 a trend is indicated at which point momentum indicators should not be used
  • 47. Momentum Sometimes popular indicators such as RSI do not move to extremes There are two methods that can be used to determine better trading opportunities:
  • 48. Momentum More sensitive version of RSI
  • 49. Momentum Breaks of momentum trend lines
  • 50. Momentum After a trend – when should momentum indicators be used? When there is a divergence
  • 51. Momentum Bullish Divergence – Price is making new lows – Momentum is making higher lows Bearish Divergence – Price is making new highs – Momentum is making lower highs The underlying momentum of price is slowing beware of a reversal!
  • 52. Momentum
  • 53. Momentum Wealth Warning!! A divergence is not a reversal signal and trades should not be based only on the fact that a divergence has occurred Look for other signals: – A break of a trend line – Break of a pattern – Break of the sequence of highs/lows
  • 54. Momentum
  • 55. Momentum
  • 56. Confirm your analysis! Technical analysis is a broad subject with many different techniques. However, it is often risky to rely on one indicator/technique alone. Stronger profitability will come from utilizing complimentary analytical techniques
  • 57. Confirm your analysis! What kind of complimentary techniques are there? Momentum – used in consolidation and divergence after trends Trend lines breaks Fibonacci projections from Elliott Wave Pattern breaks Time cycles
  • 58. Confirm your analysis!
  • 59. Confirm your analysis!
  • 60. Confirm your analysis!
  • 61. Confirm your analysis!

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