In bertradng, we can get only profit when the price moves. Yes. Only when the price moves. Whether he's moving up or moving down. Well the price tendency moves in one direction, that is the trend. The Trend itself is very useful and is the most important part in determining your position in the trade. In relation to the position in trading there are only two i.e. buy and sell, the trend also has only two types namely an uptrend and downtrend. Indonesian language Yes trend up and down trends.
Let's look at the picture below:
Just imagine if we did not know how to look for trends in price movements like this. When prices are in a trend of down you open a buy position and vice versa when the price moves up, you open a sell position. Hegh's ... At least you will not be able to sleep soundly in a State such as positions that snagged hehehe.
So to determine the trend is happening is very important and You should not ignore it. Ignore, then You will just be trading a gambling. Underestimate, then the market will kick you to painful days and sometimes months. Depending on the social effects which caused because you lose some money.
Most technical analysis is used to predict trend and the extent to which the trend will last. Some indicators like Moving averages or Parabolic SAR is also used to find out where the market is currently running.
There are however circumstances where the market does not move up or down are commonly called side ways. In the circumstances of the case, the opening position to buy or sell the same spending patience ultimately erode your emotions in trading. Side ways situation usually happens when European or American markets are closed or are waiting for the big news. In such circumstances there is not much trading going on thus causing situations side ways going on. Well, avoid this situation.
Support and Ressistance
Other terms you need to know is commonly called Support and Ressistance. Now Let's watch together when a trend is in progress. Let's say an uptrend. Is there a trend that never ends? Of course not. Any increase will reach its peak point to stop rising and then continues with the downturn. Likewise, when the price moves down, there will be a time where the decline stop and prices back up.
The points where the increase and decrease of the prices stop called point support and the ressistance. The lower limit of normal price movement called Support while commonly referred to as upper limit ressistance.
These two points are very vital in your trading future. Without knowing the point then we can only follow the trend without knowing that the actual age of the trend is not going much longer will be replaced with the opposite trend or a situation side ways.
There are many ways of determining a point of support and ressitance. Some traders use indicators to figure it out. Others use the Fibonacci sequence while others use history of price movements in the past. I myself do not want to get too giddy to calculate support ressistance by using complicated calculations. Forex for me is enough complicated by complex psychology and analysis inside. So, why don't we just simplify? Sometimes simple is better.
The easiest way to determine support and ressistance is by knowing the lowest and highest price movements in a certain period in the past, such as one month. Consider the following graph:
The above graph is a graph for GBPUSD on January 14, 2011 with a period of 1 hour. Note that the price moves up but does not exceed the area that had marked a line in blue. When the price moves up to approaching price seems to lose then 1.5885 its ability to move up again through that point and vice versa when he moves down, the price can not penetrate the limits of 1.5575 point terrendahnya. The point that's called 1.5885 ressistance and 1.5575 called support.
The second point is actually a reflection of psychological point recognized by market participants simultaneously. As we know together that are essentially price movements are determined by the law of demman and supply (supply and demand). When demand rises while supply remains the currency will strengthen and vice versa when supply and demand remain the currency will weaken due to the abundance of supply in circulation in the market.
Well the price uptrend for example, then psychologically it will cause a big snowball tergulirnya and corroborate. When prices start creeping up then as traders will usually follow the trend is going on and take a new buy position. This has resulted in rising demand so prices continue to terdongkrak up.
But on the other hand the majority of traders are also anticipating the end of the trend by taking a point certain ressistance. At that point they are no longer doing the buy action otherwise they would perform the action of profit taking by selling the currency they have purchased previously. Well, if everyone do so automatically reduced demand and rising currencies began to lose power. As a result, the price back down.
So the key here is how to determine the point of support and the same with point ressistance support ressistance market collectively. If we know these points then trading will be much easier.
And now comes a new question in the minds of us: could it be that point support and can be penetrated by ressitance price movements? The answer is maybe. Hard indeed but maybe-just maybe.
In a State where buyer and seller win less, of course the price could go back up even though it continues to reach the point of ressistancenya. In a State so then actually vote point of support and not uniform on the market a ressistance and is divided into several groups. One group estimates the price will not go up until a certain level while other groups argue the price can go up melewari level specified in the first group. If the second group win, of course support or ressistance will break.
What will happen when the point soup and the impregnable res? The answer is the support point and will form a new ressistance. The impregnable ressistance point will be a point of support while new ressistance point will return to form. Consider the following image:
This is a chart of GBPUSD by using the 1-hour time frame. Appears on the sign given yangi circles, the price broke through the point of ressistancenya. As a result prices are moving increasingly away from the point the ressistance formed new ressistance point on the horizontal line of the topmost.The point was once impregnable ressistance now transformed into a point of support and is now the new price moves on the new rangenya.
Now the next question remains is how to know that the price point will penetrate his ressistance support or not. Hahaha, when it's up here, you have to learn some technical analysis instruments, especially those of type oscillator for menegetahui purchase or saturated saturated point jualnya. It should be also taken into account the fundamental situation is happening. Not easy indeed. Most know the critical points of the translucent whether soup and res from his experience after many years of trading. Yes I also sih. So it must be recognized that experience matters.
Ok kids up here the lessons of our res and soup. Pretty easy isn't it? (Do I hear anyone shout "Yes Ma'am teachers ...")
Overbought and Oversold
Ok we get the next point of technical analysis is a term named as saturated and saturated buy offers (overbought-oversold or commonly abbreviated as OB and OS just let me not tired of writing it). OB and OS is a State where it can no longer continue the price trends because it was too expensive or too low prices so that the trend can no longer continue. In contrast to the soup and the res is a psychological level basically deals with unofficial among fellow traders, OB and the OS itself is a real and commonplace circumstances occur in the market (not merely psychological things).
If a trend is going up, then in these circumstances the currency become more expensive than usual. If we find a moderate uphill ride GBPUSD chart for example, it means increased fortune is worth GBP versus the USD. Market participants continued to hunt down GBP due to required price will continue to go up and they still have sufficient capital to purchase action.
But there will be a point at which the buyer is no longer possible to buy GBP due to its price was too expensive. Buyer's opinion matters not only that the price is too expensive, but more than that is their capital already can no longer suffice to buy a specific amount in GBP. Well this is what is called a State of saturation point buy or OB.
On the contrary when the downtrend is going on, there will be a point where prices are going to stop going down because the sale price was too low so that the seller is no longer possible to sell its currency or they will be losers. This is called saturation sold OS.
In the circumstances the price reaches the point of its OS or OB then expected the price would turn direction and trend will soon cease. So when moving up and point the OB has been reached, then the prices will again rise trend would stop and then replaced by moving falling currencies. Vice versa when the price moves down and then entered the area of the OS then the prices will move back up and down trend was stopped.
Often the OB and OS also occur at points of soup and Res because it both is the point that is the same i.e. the trend counters. But not always the case. Of course buy and sell decisions will greatly support the once when prices are not on these extreme points.
Now the question is how to define the point of this OS and OB? The easiest way is to use an indicator of type Oscillator such as RSI or Stochastic. These indicators are designed to determine the points of the OB and the OS.
Let's use an example of an indicator: the Stcohastic Oscillator. On Stocastic, area OB occurs when the value of the Stochastic is at a level above 80 and the OS occurs when the Stochastic is under 20 level. Note the picture below:
The Area marked in blue is a saturated area buy and sell saturated. You can see it on a blue rectangle which I describe. When prices move down, and then touched the area saturated jualnya then return prices moving up because the price is too cheap for sale by the seller. The same situation also happened in saturated areas of the purchase.
About the use of Stochastic is more detail we will be discussed at the next session of technical analysis. Please be patient.
Now with that in mind we can estimate kapankan a trend ended and was replaced with the next trend. Thus, we can set the opening position of the timing be better again.
See you at the next lesson.
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