Technical Analysis Forex

Candlestick charts are the standard in forex. Each candle shows:
- Open — where price started the period
- High — highest price reached
- Low — lowest price reached
- Close — where price ended

Green/white candle: Close > Open (bullish period)
Red/black candle: Close < Open (bearish period)

The body (thick part) shows the open-to-close range. The wick (thin lines) shows the high-low range.

Timeframes: M1 (1-minute) through D1 (daily), W1 (weekly), MN (monthly). A candlestick on D1 represents one full day of price action. Same price, different perspectives — scalpers use M5, swing traders use H4 and D1, position traders use W1 and MN.

Uptrend: Series of Higher Highs (HH) and Higher Lows (HL). Price is making higher peaks and higher troughs.

Downtrend: Series of Lower Highs (LH) and Lower Lows (LL).

Sideways/Range: Price bouncing between roughly equal highs and lows.

The trading rule: "The trend is your friend." Trade in the direction of the trend, not against it. A buy in an uptrend has institutional order flow behind it. A buy in a downtrend fights the dominant momentum.

How to define the trend: Use the daily chart as your primary trend reference. If price is making HH/HL on the daily, the bias is long. Enter on H4 or H1 pullbacks in the direction of the daily trend.

Trend change signals: When price breaks the most recent Higher Low (in an uptrend) and closes below it, the uptrend structure is broken. This is not immediately a short signal, but a warning to close longs and reassess.

Support: A price level where buying pressure previously exceeded selling pressure, causing price to bounce upward. Once broken, support often becomes resistance.

Resistance: A price level where selling pressure previously exceeded buying pressure. Once broken, resistance often becomes support.

How to draw levels: Mark the price where price has previously reversed (body closes, not wicks). Connect at least 2 touch points. The more times price has reacted at a level, the more significant it is.

Dynamic S/R: Moving averages act as dynamic support/resistance in trending markets.

Key levels to watch always:
- Round numbers (1.0800, 1.1000 — psychological levels with heavy orders)
- Previous day/week/month high and low
- 52-week highs and lows
- SMA 200 on the daily chart

These levels are watched by millions of traders simultaneously — making them the most reliable in all of technical analysis.

1. Moving Averages (EMA 21, SMA 50, SMA 200): Trend direction and dynamic support/resistance. The foundation.

2. RSI (Relative Strength Index, 14 period): Momentum oscillator. Above 50 = bullish momentum. Below 30 = oversold (potential buy zone). Above 70 = overbought (potential sell zone).

3. MACD (Moving Average Convergence Divergence): Trend and momentum. Histogram above zero = bullish. Crossovers signal momentum shifts.

4. Bollinger Bands (20,2): Volatility and relative price. Squeeze = big move coming. Bands provide dynamic overbought/oversold reference.

5. Fibonacci Retracement: Identifies potential pullback levels (38.2%, 50%, 61.8%). Used extensively for entry targeting on trend pullbacks.

Important: Indicators are derived from price. They do not predict — they describe. Use 1–2 maximum; stacking 5 indicators on one chart creates analysis paralysis and conflicting signals.