The document provides a comprehensive overview of the foreign exchange (forex) market, detailing its function, structure, and significant historical events. It highlights the importance of currency exchange in international trade, outlines the characteristics of the forex market, and discusses market participants and dynamics like liquidity, trading hours, and risk factors. Additionally, it covers analytical methods used to evaluate currency movements, including both fundamental and technical analysis.

1. FOREX MARKET

3. CURRENCY

4. Global Forex Hours

5. Need of Forex Market
• All international trade (export/import) transactions are
essentially of two types:
(1) The transfer of merchandise, services and portfolio products, and
(2) The exchange of currencies.
• When buying goods from one country, you have to pay for it in
that country’s currency.
• Therefore they must exchange the domestic (home) currency
for an appropriate value of the other country’s currency & as
such the issue for a rate at which the conversion takes place
arises, thus known as the Foreign Exchange Rate.

6. • It is the value of one currency in terms of another.
For one unit of the home currency, how many units of the foreign
currency you will get.
• The rate at which exports and imports of a nation are converted
into the domestic or foreign currency at a given point of time.
Meaning of Forex Rate

7. Any financial transaction
that involves more than
one currency is a
foreign exchange
transaction.
Most important
characteristic of a
foreign exchange
transaction is that it
involves Foreign
Exchange Risk.
What is a Foreign Exchange Transaction ?

8. Global Forex Market
• Largest market in the world
• Global average daily turnover above $5.0 trillion
• More than 90% of the turnover is speculative
• 40% of volume is Spot whereas 60% Forwards &
Swaps
• OTC Market lot ranges from $ 0.5 to $ 5 Mio
• The increase was driven by the 48% growth in
turnover of spot transactions, which represent
37% of foreign exchange market turnover. Spot
turnover rose to more than $4 trillion in April
2011 from $1.0 trillion in April 2007
• The higher global foreign exchange market
turnover from 2010 is largely due to the increased
trading activity of non-reporting banks, hedge
funds, pension funds, mutual funds, insurance
companies and central banks, among others
Source: Bank of International Settlements Triennial Survey

9. 0
1000
2000
3000
4000
5000
6000 1998
2001
2004
2005
2006
2007
2008
2009
2010
2011
2013
2016
Daily Turnoverfor Global ForeignExchange
Average Daily
Turnover for Foreign
Exchange
Global Foreign Exchange
Market Turnover
US Dollar ( Billions)

10. Snapshot
1944 Bretton Woods Accord implemented to stabilize currency rates in wake of World
War II; USD becomes benchmark currency.
1971 Smithsonian Agreement supersedes Bretton Woods Accord, allowing greater
fluctuations in currencies.
August 15,
1971
US unilaterally terminated convertibility of the dollar to gold. Referred to as
the Nixon shock, this created the situation in which the USD became the sole
backing of currencies and a reserve currency for the member states.
1973 Smithsonian Agreement fails and sparks the dawn of the age of the Free-Float
system.
1978 Formation of European Monetary System for gaining independence from the U.S.
Dollar.
1985 Plaza Accord – US Dollar Devaluation
1992 George Soros vs British Pound
1993 European Monetary System fails; evolution of Free-Float Foreign Exchange
system
1994-95 The Mexican Peso Collapse
Market HistoryMajor Events in International Forex

11. Snapshot
1997 Asian Currency Crisis
1998 Russian Default – LTCM Crisis
1999 European legacy currencies (French franc, German mark, etc.) cease trading as
EURO becomes the single Euro-zone currency
2001 Argentina Economic Crisis
2009 Zimbabwe Dollar – The Inflation Nation
2011 Greece Default – Fall of Euro
2013 Taper Tantrum
2016 Brexit
Market HistoryMajor Events in International Forex

12. Major Currencies
Most traded currencies
Rank Currency (Nicknames) Code (Symbol) % daily turnover
(April 2010)
% daily turnover
(April 2016)
1 United States dollar
(Greenback)
USD ($) 84.9% 87.6%
2 Euro (Single) EUR (€) 39.1% 31.4%
3 Japanese Yen (Jappy) JPY (¥) 19.0% 21.6%
4 Pound Sterling (Cable) GBP (£) 12.9% 12.8%
5 Australian Dollar (Aussie) AUD ($) 7.4% 6.9%
6 Swiss Franc (Swissy) CHF (Fr) 6.4% 4.8%
7 Canadian Dollar (Loonie) CAD ($) 5.3% 5.1%
8 Hong Kong Dollar HKD ($) 2.4% 1.7%
15 Indian Rupee INR (`) 0.9% 1.1%
Other 21.7% 27.0%
Total % (100% for buyer and 100% for seller) 200%

13. Corporates
Banks
Financial
Intermediary
Hedge
Funds
Speculators
Central Banks
Market Participants

14. Features of Forex Market
• 24-hour trading, 5 days a week with continuous access to global dealers.
• Increase in international trade.
• An enormous liquid market making it easy to exchange most currencies.
• Volatile markets offering profit opportunities for speculators and
opportunities for hedgers.
• Recognized instruments (Forwards, Futures, Options and Interest Rate
Derivatives) for controlling risk exposure.
• The ability to make profit in rising or falling markets.
• Bigger role for BRIC economies and the other emerging markets in the
global trade.
• The market share of the 23 emerging market currencies increased to
14.0% in April 2010 from 12.3% in April, 2009.

15. Price Discovery
• Satellite based : Real time on-screen display of information on
currencies and news events
• Major information vendors
-Reuters
-Bloomberg
• Through voice broker
• Dealing
-Over phone
-Over Reuters dealing system
-Over EBS
-Once deal done, dealer writes the deal on a deal slip / inputs
into online system and attaches proof of deal.
• Inside information (rarely occurs)

16. INDIAN FOREX MARKET

17. Indian FX Market
• Market participants
RBI Authorized dealers
Corporates
Brokers
Banks
Foreign Institutional Investors
• Liquidity
Enough two way liquidity for spot transactions upto USD 50 Mio (1 deal)
Average deal size USD 1 Mio.
Swap liquidity declines beyond 6 months
Forward prices actively traded till 1 year
Many banks offer USD hedge for corporate for up to even 7 years
• Market timings
9 a.m. to 5 p.m. (Monday to Friday) for INR transactions.
Offshore Market
Non Deliverable Forwards (NDF) markets are very active and useful in
regards with INR.

18. 1540 - 1545
Sher Shah
Suri
introduces
the silver
Rupayya
Bank of
Hindostan
made the
earliest rupee
notes issues
in the year
1770
1770
19th century
Gold Standard
used throughout
the world led to
the “Fall of the
Rupee”
1935
RBI commences
Operations as
a banker to the
central
government
1966 - 1971
Rupee pegged
to the US Dollar
1991
India faces
balance of
payment crisis;
pledges gold to
shore up
reserves. Rupee
devalued
1993
Exchange rate
becomes
market
determined
2000
Foreign
Exchange
Management
Act replaces
FERA
2002
Clearing
Corporation of
India Limited
commences
clearing and
settlement in
government
securities
2009
Rupee
depreciates to
52.17 during
the market
crash
(31/3/2009)
2011
Inflation, Flows,
Domestic issues
a concern…
Rupee in the
range of 44-54

19. USD/INR Movement - Long term
trendline break

20. Reserve Bank of India
The Reserve Bank is the umbrella network for numerous activities, all related to the nation’s
financial sector, encompassing and extending beyond the functions of a typical central bank.
Monetary Authority - Formulates, implements and monitors the monetary policy, announced
twice a year.
Issuer of Currency - Maintaining an adequate supply of currency
Banker and Debt Manager to Government
Banker to Banks - Providing liquidity in the markets
Regulator of the Banking System - Ensuring bank penetration and safety of depositors’ funds
Manager of Foreign Exchange - Ensuring stability of interest and exchange rates
Regulator and Supervisor of the Payment and Settlement Systems
Developmental Role - Development of financial institutions and markets.
RBI intervention in currency markets is solely to deliver low volatility in the exchange rates, and
not to take a view on the rate or direction of the Indian rupee in relation to other currencies
The Reserve Bank’s Department of External Investments and Operations (DEIO) invests the
country’s foreign exchange reserves built up by purchase of foreign currency from the market. In
investing its foreign assets, the Reserve Bank is guided by three principles: safety, liquidity and
return.

21. FOREX Arithmetic

22. Forex Arithmetic
 Type of quotes (Tom, Spot, Forward)
 Spot Rate
 Two way Quote
 Bid-Ask
 Spread
 Currency Pairs
 Quote Style
 Spot Rate Calculations
 Instruments in FX Market
 Forward Contracts
 Interest Rate Parity
 Calculation of Annualized Premium

23. Trade Date Spot
Forward/Futures
TomCash
Types of Quotes
•Inter-bank rates are always quoted on spot basis
•Spot rate is adjusted for value cash and tom
transactions as per prevailing call money rates (cost
of holding USD)
•USD/INR futures are quoted for month end largely
linked to month end premium rates

24. Spot Rate
Rate of exchange for immediate settlement
It is settled on the “Second” working day
Saturday and Sunday are holidays
Eg: SPOT rate: $ 64.35-64.36 supposing you have
1,00,000 dollar received on Thursday the bank
will settle 1,00,000*64.35 = 64,35,000 on the
following Monday.

25. Two way quote
BID QUOTE and ASK QUOTE
Ex: $ - 64.00/64.10
64.00 - bid(buying) - (Bank point of view)
64.10 - ask(selling) - (Bank point of view)
If you want to sell $, you will get 64.00
If you want to buy $ you will get 64.10.

26. Bid and Ask
The bank’s quote of Bid and Ask is from the banker’s
perspective.
Bid = Buy
Ask = Sell
Eg. USD/INR = 64.50-64.55
If the Bid rate for USD is 64.50 it means that the bank is
ready to buy 1$ for 64.50
If the ask rate is for USD is 64.55, it means that the bank is
(asking if someone will buy) selling 1$ for 64.55.

27. Spread
ASK MINUS BID = SPREAD
Eg. 64-65
SPREAD = 64 - 65 = 1
Factors: a) Stability of the exchange rate
b) Depth of the market - Volume of
transaction
High volume (deep market) - narrow spread
Low volume (thin market) - wider spread

28. Currency Pairs
Base currency
The first currency quoted in a currency pair on forex. It is
sometimes referred to as the "primary currency".
Quoted currency
It's the second currency quoted in a currency pair. It is
sometimes referred to as the "secondary currency" or
"counter currency".
Eg.
USD /
INR
Base Currency
Quoted Currency
1 USD = 64.00 INR

29. Quote Style
Exchange rate quotes, as the price of one currency in terms of
another, come in two forms:
A “direct” quotation is the amount of domestic currency
(if you are in India or Japan) per unit of foreign
currency and
An “indirect” quotation is the amount of foreign currency
per unit of domestic currency (if you are in Europe or
London).

30. Spot Rate Calculation
USD/INR 64.30 64.35
EUR/USD 1.2500 1.2510
USD/JPY 105.00 105.20
•Bank’s spot buying rate ( euro exports)
USD 1 = INR 64.30
EUR 1 = INR (64.30)*EUR(1.2500)
= INR 80.38
• Bank’s spot selling rate ( JPY imports)
USD 1 = INR 64.350
JPY 100 = INR (64.35) / JPY(105.20)
= INR 61.17

31. Problem
An Indian would like to have Travelers Cheques :
GBP - STERLING 90.70-91.25
Explain the quote
Compute the spread
How much would you pay for purchasing 250 pounds?
If you have a balance of pounds 23 in Travelers Cheques ,
how many rupees would you receive if the bank in India
quotes 89.65-91.92?

32. Answer
Bank buys at 90.70 and Ask rate is 91.25
Spread = 0.55
250*91.25 = 22812.50
23*89.65 = 2061.95
Note: In practice all forex transactions are rounded off to a
rupee i.e. 2062

33. FOREX MARKET INSTRUMENT

34. Forwards
Futures
Options
Swaps
Instruments in FX Market

35. Forward Contract
Contract to sell or buy a currency at a rate agreed
today; for delivery at a pre-determined future date or
time period
Difference between the spot and the forward rate is
called Forward Points, Swap Points, or Forward
Margin.
Outright forward rate = spot rate +/- forward points
Forward rate is the rate which neutralizes the effect of
differences in the interest rates in a given currency
pair (Except for USD/INR, which is purely on basis of
Demand And Supply)
Executed as an “Over-the-Counter” (OTC) contract with
counterparty
Participants are mainly corporates and banks having
underlying exposure in the currency.

36. Interest Parity Principle
Between two freely convertible currencies, the difference between
the spot rate and the forward rate is determined by the interest rate
differential between the two currencies.
Spot : 1EUR = 1.2625 USD
6m Interest Rates : USD 5.5% ; EUR 3.0%
6m Forward 1 EUR = 1.2782 USD
Spot Rate * Interest Rate Differential * Forward Period
100 * No. of months in the year
(1.2625*(5.50-3.0)*6)/(100*12) = 0.0157

37. Cont.
Borrow 1 Euro at 3.0% Int. payable 0.015
Sell 1 Euro against 1.2625 USD Spot
Invest 1.2625 USD at 5.50% Int. receivable 0.035
To eliminate arbitrage today’s 6m forward should be such that
USD 1.2975 = Euro 1.0150
1 Euro = (1.2975/1.0150) = USD 1.2782

38. Features of IPP
Currency with low interest rate will be at a premium
Currency with high interest rate will be at a discount
Forward rate is no indication of future spot rate

39. Calculation of Annualized Premiums
Spot $/Re = Rs.63.97
3M - Fwd. Premium = Rs. 0.60
Annualized Premium : Premium * 100 * 365
Spot * n
0.60 * 100 * 365
63.97 * 90
Result : 3.80%

40. Exercise
The United States Dollar is selling in India at Rs.64.50.
If the interest rate for 6 month borrowing in India is
7% per annum and the corresponding rate in USA is
2%.
1.Do you expect US dollar to be at premium or at discount in
the Indian forward market?
2.What is expected 6 month forward rate for United States
Dollar in India?
3. What is the rate of forward premium or discount?

41. Solution
Borrow in US at 2% and invest in India
Differential interest rate = (7% - 2%) = 5%
Since US interest rate is low dollar is at premium.
Forward rate = 64.50(1+[0.05x6/12]) = Rs.66.11

42. ANALYSIS

43. Fundamental and Technical
Fundamental analysis maintains that markets may mis-
price a security in the short run but that the "correct"
price will eventually be reached.
It studies the “Cause”.
Technical Analysis maintains that all information is
reflected already in the price. Trends 'are your friend'
and sentiment changes predate and predict trend
changes, price chart patterns. Their price predictions
are only extrapolations from historical price patterns.
It studies the “Effect”.
Two analytical models

44. FUNDAMENTAL ANALYSIS

45. Market
Forces
behind
exchange
Rates
REER
Interest Rate
Domestic
Inflation Rate
Capital
Inflows
Trade Deficits
Under valuation
Higher returns
relative to other
countries
Increase in
foreign inflows
Erodes purchasing
power
Reduce currency
demand
Debt & equity
Currency demand
increases
Excess demand
for foreign
currency
Strengthens
Weakens
Strengthens
Weakens
Strengthens
Weakens

46. Market
Forces
behind
exchange
Rates
Current A/c
Deficit
Fx Reserves
RBI
Intervention
Political
Stability &
Economic
Performance
Large reserves
Indicates the
backing a
currency has &
repay of foreign
debt
To smoothen the
disorderly market
For or Against
currency
Capital inflows
into the country
Strengthens
Weakens
Strengthens
Spends more on
foreign trade than
its earning
/borrows capital
Excess Demand
for foreign
currency
Weakens
Strengthens

47. Market
Forces
behind
exchange
Rates
Crude Oil
Prices
USD’s Global
Valuation
Geopolitical
uncertainties
Credit
Conditions
USD strength
across the globe
Consider the “Lag
effect”
Flight toward
dollar
Considered “Safe
Haven”
Credit crisis
Demand falls
Global slowdown
Weakens
Weakens
Imports around
70% of the oil
High oil price
inflates oil
import bill & step
up the $ demand
Weakens
Weakens
Impact domestic
economy. Growth,
exports &
employment
affected

48. TECHNICAL ANALYSIS

49. Principles of Technical Analysis
•The current price discounts everything
•Patterns exist
•History repeats itself
•Averages should confirm

50. Technical
Over different time periods and many markets:
• Technical can be used from 1 minute charts to intra-year
charts, making it very versatile.
•The larger time dimension gives us the direction, while
the shorter time frame the timing.
•The study of Monthly, Weekly, Daily and even 4 hourly
charts give a rounded view.
•It can be used to study any market.

51. Technical
Hourly QEUR= 01:00 18/01/2008 - 06:00 28/01/2008 (GMT)
SMA, QEUR=, Bid(Last), 63
04:00 28/01/2008, 1.4682
Cndl, QEUR=, Bid
04:00 28/01/2008, 1.4674, 1.4675, 1.4666, 1.4668
Price
USD
.1234
1.44
1.444
1.448
1.452
1.456
1.46
1.464
1.468
1.472
1.476
01:00 09:00 17:00 20:00 01:00 09:00 17:00 01:00 09:00 17:00 01:00 09:00 17:00 01:00 09:00 17:00 01:00 09:00 17:00 20:00 01:00
18 Jan 08 21 Jan 08 22 Jan 08 23 Jan 08 24 Jan 08 25 Jan 08
1 Hr
4 Hours QEUR= 16:00 02/01/2008 - 04:00 29/01/2008 (GMT)
SMA, QEUR=, Bid(Last), 63
04:00 28/01/2008, 1.4668
Cndl, QEUR=, Bid
04:00 28/01/2008, 1.469, 1.4702, 1.4662, 1.4665
Price
USD
.1234
1.44
1.445
1.45
1.455
1.46
1.465
1.47
1.475
1.48
1.485
03 04 06 07 08 09 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29
January 2008
4 Hr
Daily QEUR= 22/08/2007 - 05/02/2008 (GMT)
SMA, QEUR=, Bid(Last), 63
28/01/2008, 1.4639
Cndl, QEUR=, Bid
28/01/2008, 1.468, 1.4708, 1.4662, 1.4666
Price
USD
.1234
1.35
1.36
1.37
1.38
1.39
1.4
1.41
1.42
1.43
1.44
1.45
1.46
1.47
1.48
27 03 10 17 24 01 08 15 22 29 05 12 19 26 03 10 17 24 31 07 14 21 28 04
Aug 07 September 2007 October 2007 November 2007 December 2007 January 2008
Daily
Weekly QEUR= 04/12/2005 - 16/03/2008 (GMT)
Cndl, QEUR=, Bid
03/02/2008, 1.468, 1.4708, 1.4662, 1.4667
Price
USD
.1234
1.2
1.23
1.26
1.29
1.32
1.35
1.38
1.41
1.44
1.47
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Q4 05 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008
Weekly
Over different time periods:

52. VOLUMECANDLESTICKBARLINE CANDLESTICKBAR VOLUMELINE
Chart types
Daily QEUR= 4/6/2010 - 7/27/2010 (BOM)
Price
USD
1.17
1.2
1.23
1.26
1.29
1.32
1.35
12 19 26 03 10 17 24 31 07 14 21 28 05 12 19 26
Apr 10 May 10 Jun 10 Jul 10
Open
Close
High
Low
Volume seen increasing in
the direction of the trend.

53. Candlestick/Bar
A Comparison :

54. Very simple signals
Uptrend Downtrend

55. Reversal days

56. Basic Concepts of Trend
There are three trends
UP
DOWN
SIDEWAYS
There are three decisions
GO LONG
GO SHORT
STAY OUT OF THE MARKET

57. Short-term and Longer-term trends
A trend has three classifications
MAJOR
INTERMEDIATE
NEAR-TERM
Broadly three time horizons
LONGER THAN A YEAR
ONE TO THREE MONTHS
ONE WEEK TO ONE MONTH

58. Three Stages of a Trend
BULL MARKET
Accumulation
Big Move
Excess
Distribution
Big Move
Despair
BEAR MARKET

59. Don’t BUCK the Trend
the trend is your FRIEND
RESISTANCE
SUPPORT

60. Trendline
simple is powerful: drawing is an art
19 26 5
March
12 19 26 2
April
9 16 23 30
May
7 14 21 28 4
June
11 18 25 2
July
9 16 23
115.0
115.5
116.0
116.5
117.0
117.5
118.0
118.5
119.0
119.5
120.0
120.5
121.0
121.5
122.0
122.5
123.0
123.5
124.0
124.5
US Dollar - Japanese Yen (106.790, 106.960, 106.010, 106.580, -0.14000)
JPY= Daily
Alert when price
line is broken
How the price adheres to the
trendline:

61. The Psychology of
Support and Resistance
RESISTANCE
SUPPORT
Longs HAPPY but regret for
not having bought more.
Looks to add on to long
positions if the market dips
back
Shorts UNHAPPY as they are
on the wrong side of the
market and hope for a dip
back so they can get out at
breakeven
Uncommitted: Those who
have never had a position look to
buy on dips
Stale bulls who got out and now
regret it and look to reinstate
longs where they sold them

62. Support becoming Resistance
30 6
August
13 20 27 3 10
September
17 24 1
October
8 15 22 29 5
November
12 19 26 3 10
December
17 24 31
2008
7
1.080
1.085
1.090
1.095
1.100
1.105
1.110
1.115
1.120
1.125
1.130
1.135
1.140
1.145
1.150
1.155
1.160
1.165
1.170
1.175
1.180
1.185
1.190
1.195
1.200
1.205
1.210
1.215
1.220
1.225
1.230
US Dollar - Swiss Franc (1.09470, 1.09650, 1.09020, 1.09110, -0.00540)
Support
Resistance
CHF= Daily
Final stop for CHF

63. Moving Average
The two most popular types of moving averages are the Simple Moving Average (SMA),
the Exponential Moving Average (EMA)
12
February
19 26 5
March
12 19 26 2 9
April
16 23 30 7
May
14 21 28 4
June
11 18 25 2
July
9 16 23 30 6
August
13 20 27 3 10 17
September
24 1 8
October
15 22 29 5 12
November
19 26 3 10 17
December
24 31 7
2008
14 21 28 4 11
February
0.645
0.650
0.655
0.660
0.665
0.670
0.675
0.680
0.685
0.690
0.695
0.700
0.705
0.710
0.715
0.720
0.725
0.730
0.735
0.740
0.745
0.750
0.755
0.760
0.765
0.770
0.775
0.780
0.785
0.790
0.795
0.800
0.805
0.810
0.815
0.820
0.825New Zealand Dollar - US Dollar (0.77000, 0.77380, 0.76700, 0.77380, +0.00610)
Moving Average
Bollinger Bands
Oscillators-RSI
Oscillators-MACD
Oscillators-Stochastics

64. Moving Average
Moving Average
Bollinger Bands
Oscillators-RSI
Oscillators-MACD
Oscillators-Stochastics
Daily QEUR= 1/23/2009 - 8/16/2010 (BOM)
Cndl, QEUR=, 7/19/2010, 1.2893, 1.2991, 1.2868, 1.2957 SMA, QEUR=, 7/19/2010, 1.2541Price
USD
1.2
1.25
1.3
1.35
1.4
1.45
1.5
F M A M J J A S O N D J F M A M J J A
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
Golden Cross
Dead Cross

65. Bollinger Bands
13 20 27 3 10
September
17 24 1
October
8 15 22 29 5
November
12 19 26 3 10
December
17 24 31
2008
7 14 21 28 4
February
11
-1.0
-0.5
0.0
0.5
1.0
1.5
0.660
0.665
0.670
0.675
0.680
0.685
0.690
0.695
0.700
0.705
0.710
0.715
0.720
0.725
0.730
0.735
0.740
0.745
0.750
0.755
0.760
0.765
Euro Dollar-British Pound (0.74000, 0.74360, 0.73920, 0.74220, +0.00210)
Band Narrowing a trigger in the
direction of trend
Close below mid
point- signal for
dip for lower band
John Bollinger, a long-time technician of the markets developed the technique of using moving averages with two trading
bands, not unlike using envelopes on either side of a moving average. Unlike using a percentage calculation from a
normal moving average, Bollinger Bands simply add and subtract a standard deviation calculation.
Bollinger Bands
Oscillators-RSI
Oscillators-MACD
Oscillators-Stochastics
Moving Average

66. Relative Strength Index
Is the market overbought or oversold, Oscillators help us determine that.
Overbought
Oversold
The Relative Strength Index (RSI) compares an instrument with its own past history. It measures the ratio of up-moves
to down-moves and normalises the result so it falls between 0 and 100.
Oscillators-RSI
Oscillators-MACD
Oscillators-Stochastics
Moving Average
Bollinger Bands

67. Convergence & Divergence
Moving Average
Daily Q=USD 20/07/2007 - 31/01/2008 (NYC)
SMA, Q=USD, Last Trade(Last), 63
29/01/2008, 76.167
Cndl, Q=USD, Last Trade
29/01/2008, 75.538, 75.604, 75.517, 75.59
Price
.123
75
76
77
78
79
80
MACDF, Q=USD, Last Trade(Last), 12, 26, 9, Exponential
29/01/2008, -0.057
Value
.123
-0.1
0
0.1
23 30 06 13 20 27 04 10 17 24 01 08 15 22 29 05 12 19 26 03 10 17 24 31 07 14 21 28
July 2007 August 2007 September 2007 October 2007 November 2007 December 2007 January 2008
Positive divergence
USD Index=Daily
Oscillators-MACD
Oscillators-Stochastics
Moving Average
Bollinger Bands
Oscillators-RSI

68. Oscillators - Stochastics
Oscillators-Stochastics
Moving Average
Bollinger Bands
Oscillators-RSI
Developed by George C. Lane in the late 1950s, the
Stochastic Oscillator is a momentum indicator that
shows the location of the current close relative to
the high/low range over a set number of periods.
Closing levels that are consistently near the top of
the range indicate accumulation (buying pressure)
and those near the bottom of the range indicate
distribution (selling pressure). It is scaled between
0 and 100 like RSI.
Oscillators-MACD

69. Oscillators - Stochastics
Oscillators-Stochastics
Moving Average
Bollinger Bands
Oscillators-RSI
Oscillators-MACD
Overbought
EUR=Daily12 19 26 3
December
10 17 24 31
2008
7 14 21 28 4
February
11
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
100
1.400
1.405
1.410
1.415
1.420
1.425
1.430
1.435
1.440
1.445
1.450
1.455
1.460
1.465
1.470
1.475
1.480
1.485
1.490
1.495
1.500
Euro - US Dollar (1.47800, 1.47960, 1.47760, 1.47770, -0.00020), Stochastic Oscillator (87.9894)
Overbought
Oversold
EUR=Daily

70. Continuation Patterns
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Flags
Rising Wedges
Falling Wedges
Symmetrical Triangle
Ascending Triangle
Sell on confirmation of
symmetrical triangle with a
down trend after failure and
lower close and a “triple top”.
100% projection target met
Daily QINR=IN 3/16/2010 - 8/2/2010 (BOM)
Price
44.5
45
45.5
46
46.5
47
16 01 16 03 17 01 16 01 16 02
Mar 10 Apr 10 May 10 Jun 10 Jul 10
Minimum Price
Objective
A
B
Height of the
Triangle (AB)
Breakout Point
Return to the Neckline
The upper resistance line acting as
support on dips after the breakout
C

71. Continuation Patterns
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Flags
Rising Wedges
Falling Wedges
Descending Triangle
Flags
Examples of “falling” or
descending triangles
Bullish FlagW e e k ly QCHF= 6/28/2009 - 10/17/2010
P
/
J A S O N D J F M A M J J A S O
Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010
Break-out Point
Flag pole
“Price Objective”
Duplication of Flag pole
Usually occurs
after a sharp
curve

72. W e e k ly QINR=IN 12/28/2008 - 9/26/2010 (BOM)
Price
43
44
45
46
47
48
49
50
51
52
53
J F M A M J J A S O N D J F M A M J J A S
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Measuring technique
Price Objective from
the break-out point
Will act as a
Support
Breakout point - BUY
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Flags
Rising Wedges
Falling Wedges
Rising Wedges
Falling Wedges
Continuation Patterns
A bearish wedge sloping upwards
against the prevailing downtrend.
Sell point
Downtrend
Daily QGBP= 2/2/2010 - 8/5/2010 (BOM)
Price
USD
1.42
1.44
1.46
1.48
1.5
1.52
1.54
16 01 16 01 16 03 17 01 16 01 16 02
Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10
Measuring technique
Price objective from the
breakout
Breakout point - SELL
Return to the Neckline
Buy Point
A Bullish Wedge sloping downwards
against the prevailing uptrend
Uptrend