Bearish Abandoned Baby

This Pattern signals a : Reveral
Reliability of this candlestick pattern: High



How to Identify:
Three candles are involved in forming this pattern. On a daily chart, here's how it will unravel:

1. 1st day is a bulls day (white candle)
   
2. 2nd day is undecisive day (doji) day - here the shadows of this day are above the first day.
   
3. 3rd is bears day (black candle) with no overlapping shadows
   

In the best setup - the shadows of doji should completely gap above the shadows of the first and third day.

Market Psychology:
Bulls were ruling on the first day and the second day's opening gap encourages them more - however, the Bulls having seen good profits start taking them off the market - pushing the close of the day near the open - thus forming a doji.

However, the third day open reveals that the second day was more of an indecision by the bulls to push their agenda - that gives bears the upper hand with the opening gap of the second day and thus the bears take over the market.

Global Forex Trading

Global Forex TradingGlobal Forex trading is a market that is linked throughout the entire world through a web of banks, corporations and independent investors. Because of this world wide market, global Forex trading relies on the fluctuations of currencies in every country. Having dealers in almost every time zone, including London, New York, Sydney, Hong Kong and Tokyo, a trade can be made anywhere at any hour. The keys to trading are contingent on many factors. With such a large network, global Forex trading is executed based on the economical, political and psychological factors of countries and of investors. How These Factors WorkAs always, the economic changes caused by unemployment, inflation and interest rates, play a large role in the rate a currency is at. It is crucial to watch and even anticipate these changes when choosing a trade, hoping that the rate of the currency you buy will increase after your trade. Alterations in a country's economic standing is one factor that must be expected, because it is this expectation that often changes the rate before the economic conditions even alter. Another anticipation that is significant is the mentality of other investors and their reaction to changes. The reactions of traders to the market must also be predicted because, usually large numbers of investors will make similar moves and affect the market.

New Zealand Dollar Short Term Bearish

Daily FX
New Zealand Dollar Short Term Bearish
Tuesday June 26, 8:03 am ET
By Jamie Saettele, Technical Currency Strategist strategist@dailyfx.com

Commentary: The rally from .7452 may also be the b wave of an irregular flat correction.

If this is the case, then price is likely to fall from close to current price towards .7452. The measured objective for the end of wave b is .7687/.7708, which is the 127%-138.2% of .7637-.7452. Daily RSI is overbought and divergent with the recent high as well.

The Gann Angles

Gann Angles: Time and Price Analysis

W.D. Gann (1878-1955) developed the use of what he called "Geometric Angles", now commonly referred to as Gann Angles, used to determine trend direction and strength, support and resistance, as well as probabilities of price reversal.

Gann was fascinated by the relation of time (T) and price (P). Gann drew his angles from all significant price pivot point highs and lows. He used just one pivot point to draw an angle that rose (or fell) at predetermined and fixed rates of speed, as follows:

T x P = n degrees 1 x 8 = 82.5 degrees 1 x 4 = 75 degrees 1 x 3 = 71.25 degrees 1 x 2 = 63.75 degrees 1 x 1 = 45 degrees 2 x 1 = 26.25 degrees 3 x 1 = 18.75 degrees 4 x 1 = 15 degrees 8 x 1 = 7.5 degrees

Where:

T is the number of units of time, graphically plotted on the horizontal x-axis.

P is the number of units of price, graphically plotted on the vertical y-axis.

x is read as "by".

n degrees specifies the slope of the Gann angle, measured in degrees.

Translating time by price into degrees assumes a square grid, where one unit of time on the x-axis takes up the same amount of horizontal space as the one unit of price on the y-axis takes up vertical space. For example, 1/16 of an inch might be set to one week of time on the horizontal x-axis, and 1/16 of an inch might be set to one dollar of price on the vertical y-axis. On such a proportionally scaled chart, the 1 x 1 geometric angle, which for every one unit of time rises one point in price, is a 45 degree angle.

Without this equality of time and price scaling, however, Gann angles stated in degrees do not work out correctly. That would not prevent correct Gann angles from being drawn on oddly proportioned grids; it would only prevent the translation of time by price angles into correctly-displayed degrees. But that would not affect the interpretation of the Gann angles if we avoid thinking in terms of degrees. Rather than thinking in terms of degrees, it is simpler to express Gann angles in terms of units of time by price.

For practical purposes, weekly Gann angles, drawn on a weekly bar chart, appear to offer the most useful perspective. Gann often said that the weekly chart was more important than the daily chart. Nevertheless, Gann angles are flexible and can be used on any time-scale, so long as the time by price proportions are correctly calculated.

Gann angles offer indications of support and resistance that may not be evident based on any other method. For example, during an up-trend, the 1 x 1 angle tends to provide major support. A major reversal is signaled when prices fall below the 1 x 1 angle. According to Gann, prices should then be expected to fall to the next angle below, the 2 x 1 angle. In other words, as one angle is penetrated, expect prices to move to and consolidate at the next angle, which is less steep.

Gann placed special emphasis on the 1 x 1 angle. On a perfectly proportioned time by price grid, in an uptrend, the 1 x 1 angle extends "northeast" at a precise 45 degree angle. This 1 x 1 angle is the most significant angle: it represents a sustainable, perfectly balanced trend, not too fast and not too slow, but just right. In a bullish uptrend, the 1 x 1 angle tends to provide major support. When this 1 x 1 angle is broken, a significant price trend reversal is signaled. The price should then drop down to test the 2 x 1 angle, below.

In a downtrend, the 1 x 1 angle extends "southeast" at a precise 45 degree angle. Eventually, after a downtrend, when price moves above and stays above the 1 x 1 angle (which is sloping down and to the right at 45 degrees), price should then make its way up to test the next, less-steep Gann angle, the declining 2 x 1 angle. An angle that provided resistance, once decisively broken, should provide support.

Furthermore, when a 1 x 1 angle crosses a horizontal line extending forward in time from a significant past pivot point price (an obvious high or low), then time and price are square relative to that past pivot point, and that is a likely time for a change in trend or an acceleration of the existing trend. Also, when a geometric angle crosses zero or another geometric angle, a trend change is likely.

Identification of the most important Gann angle is dependent of the price level of the instrument analyzed: very high and very low priced instruments will follow steeper and shallower Gann angles, respectively. In other words, the best functioning Gann angle for support and resistance depends on the price level of the instrument being analyzed.

For example, for the S&P 500 Composite Stock Price Index, a relevant support and resistance price channel was well defined by 2 x 1 weekly Gann angles from the 8/9/82 price low at 102.20 until 1995. After the 12/9/94 low at 442.88, the S&P price level quickly rose so high that the bull market trend was better defined by the rising 1 x 4 weekly Gann angles. A glance at the chart should make obvious the value of these Gann angles, which can be drawn before the fact, as soon as the user can identify a pivot point high or low. (See Robert W. Colby's book, page 285, for this chart.)

Gann also divided significant price and time ranges and previous highs and lows into eighths, and looked for support and resistance there. For example, dividing the low to high price range after a substantial upswing, the most important divisions would be 8/8 (or the high), ½ (the midpoint) and 0/8 (the low). Next most important would be 3/8 and 5/8. Expressed in decimals, 3/8 is 0.375 and 5/8 is 0.625, which are only .007 away from the Fibonacci ratios of 0.382 and 0.618.

Note: The above is an excerpt from The Encyclopedia of Technical Market Indicators, Second Edition, McGraw-Hill Publishing, 2003

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10 Essentials Forex Trading .

As a newbie...i just want to share 10 assentials forex trading that i read from other forex blog hese 10 Forex trading essentials are a high-level peek at the pitfalls that catch many traders. Compare your trading style with these simple fixes and if you are not employing some or all of them, you are placing yourself at a higher risk level.

1) Increase your time perspective - If you are not a well seasoned Forex trader, you shouldn't even look at a price chart of less than 60 minutes. The randomness of the normal transactions which occur in Forex will distort your judgment of the true picture. Use longer time frames, such as 60 minute, 4 hour and daily charts when planning your trades.

2) Reduce your position size to 5% Maximum - Having more than 3 to 5 percent of your trading capital on the table is a major no no. High leverage makes it very easy to get in away over your head. This combination snares many traders and can rapidly destroy your account. You need to have the ability to ride the volatility waves common in Forex.

3) Give your trade time to work - You can only use this option effectively if your position is sized safely... as per 2) above. Prices will fluctuate dramatically in Forex, and you need to be sure that a loss really is a loss before you close a trade that is moving against your plan. A 30 pip stop loss will often kick you out of a trade, just as it's about to turn in your direction. You need to allow for larger price swings... if you have determined the major price trend, be patient and let the odds work in your favor.

4) Reduce your dependence on technical indicators - Due to the fact that technical indicators get their data from past events, the reality is they have no ability to predict the future. Pro's that enjoy success using these indicators, often profit from the knowledge of how the masses are likely to react to this data, rather than the information itself. You need to determine the major trend (a simple moving average will show you this) and hop aboard. Use a longer time frame, as in 1). The largest players in Forex rely about 25% on technical indicators when making their trading decisions.

5) Trade only one or two currency pairs - And stick to the majors... not the crosses. Currency prices are driven primarily by fundamental data. In order to anticipate what is likely coming down the road, you need to follow some basic data for each of the countries involved. Trading too many currencies will make it difficult to keep up to date. There is equal opportunity to profit from each of the pairs, so wait until your experience level has matured and the information tends to sink in without as much effort on your part before you start to trade more currencies.


6) Average in and out of your trades - If your trading account is less than $50,000 have your broker enable mini-lots for your account. This will allow you to average in and out of your trades... a great way to add more flexibility to your account. If this applies to you and your broker doesn't offer mini lots, find a new broker... this is an important need to do.

7) Follow the data for your currency pair(s) - Know what data is pending for release. Volatility often increases dramatically when these releases occur. The safe strategy is to exit your positions prior to major releases... this is the way many of the larger accounts handle these situations. Data releases can often cause a change to the trend. Take them seriously. Determine the trend and get aboard - As with any type of trading, the safest bet is to determine which way prices are trending, and then trade in that direction.

8) You don't need anything fancy... a simple moving average on your candlestick chart is sufficient. Zoom your chart out to be sure you have the big picture. Compare where the price is now, relative to where is has been for a significant amount of time (at least a month). Use caution if the current price is near upper or lower extremes, as there may be a trend change once that extreme is reached.

9) Know when to take a profit - A winning position can quickly turn into a loser if you set your sights too high. Don't be afraid to take your profit - or a part of your profit at 20 or 30 pips. The price waves in Forex make it ideally suited to averaging into and out of positions by using multiple entry and exit points for each position. This is exactly where your mini lots can help! The benefit of spreading out your position is that your overall risk is reduced.

10) Stop listening to 'Gurus' - Don't fall into the trap of believing everything, or even most things, you hear. The trading world is overflowing with gurus only too willing to offer their opinion on the future. It will only be an opinion, nothing more. They may seem to have convincing data, but trust your own brain. You need to weigh the economic data from your countries... that is what drives currency prices. The enormous size and nature of Forex ensure there is no insider information. You have access to the same data as everyone else in the game. In time, your own instinct will guide you to your goals, and that is what you need to trust.

Candlestick chart

A candlestick chart is a style of bar-chart used primarily to describe price movements of an equity over time.

It is a combination of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval. It is most often used in technical anylsis of equity price patterns. They appear superficially similar to errors, but are unrelated.

History

Candlestick charts are said to have been developed in the 17th century by legendary Japanese rice trader . Muneshia Honma The charts gave Honma and others an overview of open, high, low, and close market prices over a certain period. This style of charting is very popular due to the level of ease in reading and understanding the graphs. Since the 17th century, there has been a lot of effort to relate chart patterns to the likely future behavior of a market. This method of charting prices proved to be particularly interesting, due to the ability to display four datapoints instead of one. The Japanese rice traders also found that the resulting charts would provide a fairly reliable tool to predict future demand.

Candlestick Layout

Canadalestick are usually composed of the body (black or white), an upper and a lower shadow . The wick illustrates the highest and lowest traded prices of a stock, and the body the opening and closing trades. If the stock went up, the body is white, with the opening price at the bottom of the body and the closing price at the top. If the stock went down, the body is black, with the opening price at the top and the closing price at the bottom. A candlestick need not have either a body or a wick.

Patterns

There are multiple forms of candlestick chart patterns, with the simplest depicted at right. Here is a quick overview of their names:

1. White candlestick - signals uptrend movement (those occur in different lengths; the longer the body, the more significant the price change)
2. Black candlestick - signals downtrend movement (those occur in different lengths; the longer the body, the more significant the price change)
3. Long lower shadow - bullish signal (the lower wick must be at least the body's size; the longer the lower wick, the more reliable the signal)
4. Long upper shadow - bearish signal (the upper wick must be at least the body's size; the longer the upper wick, the more reliable the signal)
5. Hammer - a bullish pattern during a downtrend (long lower wick and small or no body); Shaven head - a bullish pattern during a downtrend & a bearish pattern during an uptrend (no upper wick); Hanging man - bearish pattern during an uptrend (long lower wick, small or no body; wick has the multiple length of the body.
6. Inverted hammer - signals bottom reversal, however confirmation must be obtained from next trade (may be either a white or black body); Shaven bottom - signaling bottom reversal, however confirmation must be obtained from next trade (no lower wick); Shooting star - a bearish pattern during an uptrend (small body, long upper wick, small or no lower wick)
7. Spinning top white - neutral pattern, meaningful in combination with other candlestick patterns
8. Spinning top black - neutral pattern, meaningful in combination with other candlestick patterns
9. Doji - neutral pattern, meaningful in combination with other candlestick patterns
10. Long legged doji - signals a top reversal
11. Dragonfly doji - signals trend reversal (no upper wick, long lower wick)
12. Gravestone doji - signals trend reversal (no lower wick, long upper wick)
13. Marubozu white - dominant bullish trades, continued bullish trend (no upper, no lower wick)
14. Marubozu black - dominant bearish trades, continued bearish trend (no upper, no lower wick)

Reversal Patterns

Prior Trend

For a pattern to qualify as a reversal pattern, there should be a prior trend to reverse. Bullish reversals require a preceding downtrend and bearish reversals require a prior uptrend. The direction of the trend can be determined using trendlines, moving averages, or other aspects of technical analysis.

Hammer and Hanging Man

The hammer and hanging man look exactly alike but have totally different meaning depending on past price action. Both have cute little bodies (black or white), long lower shadows and short or absent upper shadows.

The hammer is a bullish reversal pattern that forms during a downtrend. It is named because the market is hammering out a bottom.

When price is falling, hammers signal that the bottom is near and price will start rising again. The long lower shadow indicates that sellers pushed prices lower, but buyers were able to overcome this selling pressure and closed near the open.

Word to the wise… just because you see a hammer form in a downtrend doesn’t mean you automatically place a buy order! More bullish confirmation is needed before it’s safe to pull the trigger. A good confirmation example would be to wait for a white candlestick to close above the open of the candlestick on the left side of the hammer.

Recognition Criteria:

• The long shadow is about two or three times of the real body.
• Little or no upper shadow.
• The real body is at the upper end of the trading range.
• The color of the real body is not important.

The hanging man is a bearish reversal pattern that can also mark a top or strong resistance level. When price is rising, the formation of a hanging man indicates that sellers are beginning to outnumber buyers. The long lower shadow shows that sellers pushed prices lower during the session. Buyers were able to push the price back up some but only near the open. This should set off alarms since this tells us that there are no buyers left to provide the necessary momentum to keep raising the price. .

Recognition Criteria:

• A long lower shadow which is about two or three times of the real body.
• Little or no upper shadow.
• The real body is at the upper end of the trading range.
• The color of the body is not important, though a black body is more bearish than a white body.

In conclusion, by understanding all these points you should be ready for the real time.

I wish you a very good luck on your investment.