The good things happen to those who believe, the better ones happen to those who are patient, and the best ones – to those who do not give up – Anton Chekhov.
Along with the three main posts discussed in the Forex Technical Analysis, there are two additional ones that define market trends as primary, secondary and small. With an upward primary trend, the market is bullish and bearish – bearish. To illustrate the situation, one can take an example with a currency bear market. Buying signals appear in points A and B, where the price is higher than the previous maximum. The cyclical change in currency prices is an indication of the likelihood that the market is going to repeat at certain times.
To illustrate what has been said here, the bear market can be used.
The primary trend is divided into three stages: accumulating, up / down and distribution. At the staging stage, the smartest traders discover their new positions. In the second (drop / upward) phase, most participants “watch” the movement and each time they try to take advantage of it. In the distribution phase, the most likely players close their positions by winning. At that time, traders’ activity declined and the market declined.
The secondary trend performs a correctional function on the first one. It is able to reduce the price change achieved in the movement of the primary movement to 1/3, 1/2 or 2/3.
By identifying cycles that periodically have the ability to repeat, one can have a powerful tool in their hands. It can be very useful in both positions – short and long (on sale and purchase). Cycles play an important role when buying more than a number. The peak of the cycle is accepted to be called a comb, and the bottom of the bow.
Cycles are considered to have features that are used as signals. They are in the form of amplitudes, periods or phases. The amplitudes indicate the heights of cycles, ie the range from the ridge to the paddle. The periods are the lengths of the cycles or, in other words, the length between two successive slopes, and the phases represent how the wave heights are located.
Another important construction is that the trend confirms the volumes and is present until a breakthrough is not confirmed.