Forex encyclopedia

A number of reversal patterns is indicated in Forex: Head and Shoulders, Double top, Double bottom, Triple top, Triple bottom, Diamond. Head and Shoulders Top – is a classical reversal pattern of technical analysis, which is formed following to a long upward trend. The model is considered to be fair reliable and is often formed. But despite above-mentioned, many beginning traders do not manage to take profit using this graphic pattern. The reason is that positions are opened prior to forming this model. Let's figure out the structure of the figure and its formation on the chart of trading terminal. The model consists from three subsequent price extreme points, the middle one is higher than others (head), and the rest two are below the middle one and are roughly equal (shoulders). All three uphills are supported by the neck line.
Technical levels are one of the crucial elements of technical analysis on the Forex market. Technical levels represent a certain value approaching which the price faces resistance in further movement. On the chart it is pictured as zone (level), where price went and bounced off later, repeated its movement to the level again and without being able to pass it bounced off. Such approaching and returns can take place on a repeated basis and the more efforts are made, the stronger price level we have.
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