How do candlestick patterns work, and what do different formations indicate?

Candlestick patterns reflect price movements and market sentiment, with key formations signaling potential trend reversals. Bullish patterns, like the Engulfing and Morning Star, suggest a shift from downtrends to uptrends, while bearish patterns, like the Engulfing (Bearish) and Evening Star, indicate a reversal from uptrends to downtrends. Other important patterns include the Doji, which signals […]

MACD (Moving Average Convergence Divergence) is a momentum indicator that shows the relationship between two moving averages (typically the 12-day and 26-day EMA) of an asset’s price. A bullish signal occurs when the MACD line crosses above the signal line, while a bearish signal happens when it crosses below. The MACD histogram highlights momentum strength, […]

The Relative Strength Index (RSI) is a momentum indicator that ranges from 0 to 100, used to identify overbought or oversold conditions. An RSI above 70 suggests the asset may be overbought, while an RSI below 30 indicates it may be oversold, both signaling potential price reversals. Divergence between the price and RSI can also […]

A Moving Average (MA) smooths past price data to help identify trend direction. The Simple Moving Average (SMA) averages closing prices over a set period, treating all prices equally, while the Exponential Moving Average (EMA) gives more weight to recent prices, making it more responsive to recent price changes. Traders often prefer the EMA for […]

To identify trends, key technical indicators include Moving Averages (SMA and EMA), which smooth price data to reveal trend direction, and the Average Directional Index (ADX), which measures trend strength (with readings above 25 indicating a strong trend). The MACD is another useful tool, showing changes in momentum, trend direction, and potential reversals. These indicators […]

Common and reliable chart patterns in Forex include the Head and Shoulders (a reversal pattern signaling trend change), Double Top and Double Bottom (indicating bearish or bullish reversals, respectively), and Triangles (showing consolidation before a breakout). Flags and Pennants are continuation patterns, formed after a sharp price movement, signaling brief consolidation before the trend resumes. […]

Support is a price level where buying interest tends to prevent further declines, while resistance is a level where selling pressure limits upward movement. Traders often buy when the price bounces off support and sell when it reverses at resistance. If the price breaks through support or resistance, it signals a potential trend continuation, prompting […]

Technical analysis focuses on historical price data and market trends to predict future price movements, using charts and indicators. In contrast, fundamental analysis examines economic, financial, and geopolitical factors, such as GDP, inflation, and central bank policies, to assess a market’s intrinsic value. While technical analysis relies on market behavior, fundamental analysis is driven by […]