Technical analysis of charts aims to identify patterns and market trends by utilising differing forms of technical chart types and other chart functions. Interpreting charts can be intimidating for novice traders, so understanding basic technical analysis is essential. This article reveals popular types of technical analysis charts used in forex trading, outlining the foundations and uses of these chart types.

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USD/JPY appears to have reversed course ahead of the August low (108.72) even as longer-dated US Treasury yields come under pressure, and the exchange rate may track the monthly range ahead of the Kansas City Fed Economic Symposium scheduled for August 26 – 28 as the Federal Open Market Committee (FOMC) appears to be on track to taper its asset-purchase program.

Recent remarks from Boston Fed President Eric Rosengren suggest the central bank will adjust the forward guidance over the coming months as the 2022-voting member on the FOMC favors tapering the quantitative easing (QE) program “sooner rather than later,” and speculation for a looming shift in monetary policy may keep USD/JPY afloat as the Fed officials see two rate-hikes in 2023.

However, more of the same from Chairman Jerome Powell and Co. at the Fed symposium may drag on the US Dollar as Governor Lael Brainard expects to “be more confident in assessing the rate of progress once we have data in hand for...

The Dow Jones Industrial Average (DJIA) broke out of a short-term bull-flag a little over a week ago and along with it the consolidation pattern in place since early May. This has old-school stocks leading the broader market higher.

Of course there isn’t any resistance now that the DJIA is in record territory, so it will be a function of gravity playing its part on how high it could climb. Given the extended sideways movement in recent months, this could be a fairly extensive leg higher.

In the near-term, a dip from here will have the October trend-line in focus as support. It isn’t the cleanest form of trend support, but will nevertheless be viewed as a potential floor. It would take a sharp punch lower followed by an inability to turn around quickly, before considering that a correction (or worse) could be underway.

Disappointing Consumer Data Dampens The Nasdaq Index

Disappointing retail sales data came in at -1.1% month on month after a decline of only 0.3% was forecasted. The decline was largely attributed to the automotive sector as this has the greatest weighting in the composition of the data. Adding to the data woes, e-commerce witnessed a decline as in person sales at restaurants and other stores saw a relative increase.

Retail Sales Data:

For all market-moving data releases and events see the DailyFX Economic Calendar

Furthermore, Last Friday we saw the preliminary data for the Michigan Consumer Sentiment survey come in at 70.2 which was well below the previous and forecast figure of 81.2. The survey attempts to gain insight into consumers’ perceptions of their own financial stability and the prospects of the economy over the short and long-term so the lower figure lends itself to the slow down in the tech heavy Nasdaq.

• Rising Delta cases have had little impact on the stock market so far

• Smaller cap stocks may be signaling a possible wider correction

• Gold continues to show weak form as it attempts to recover from last week’s flash crash

In this week’s edition of the Macro Setup, featuring Guy Adami and Dan Nathan, we discussed the impact of rising geopolitical tensions and new Covid cases across various asset classes.

US equity markets continue to push higher, with their 200-day moving averages trailing behind. The breadth in the market has shown some divergence between the different indices, with only 48% of the members in the NASDAQ above their 200d MA, compared to 84% for the S&P 500, as highlighted in a tweet by Liz Ann Sonders. That said, the NASDAQ is only trailing the S&P by 4% year to date, which highlights the weight of the five major stocks (Apple, Microsoft, Amazon, Facebook, and Google) in the index and their impact on price...

The USD/CAD recovery has continued after last week’s test at a very key area on the chart. The 1.2500 psychological level has had pull in USD/CAD price action since March of this year; and that price makes up the bottom portion of a longer-term zone on the chart that spans up to the 1.2622 Fibonacci level. And as looked at last week, that price was also confluent with a trendline that can be found by connecting swing lows from early-June and late-July trade.

If you’d like to learn more about drawing trendlines, check out DailyFX Education

Chart prepared by James Stanley; USDCAD on Tradingview

After a rather pensive test of support last week, with the US Dollar falling on the heels of consumer sentiment data released on Friday, bulls sparked a topside push shortly after the open this week. Prices have run up to the topside of the support zone, with the 1.2622 Fibonacci level helping to hold the highs for now.

This keeps the door open for breakout...

It was another eventful weekend in cryptocurrencies but this week, it was the alt coins that were getting attention. Both Cardano and Dogecoin broke out to fresh near-term highs while Ethereum and Bitcoin consolidated recent gains.

In Cardano, the recent announcement of September 12th as the date for the Alonzo hard fork has continued to keep bulls on the bid and prices put in a strong move towards the all-time-high over the weekend. Resistance ended up showing at the 2.2500 psychological level. The corresponding pullback has thus far been light, with buyers holding the coin above the 2.0000 area on the chart.

The backdrop here appears to remain very bullish, with breakout potential beyond that 2.2500 level, with eyes on a test of that all-time-high around the 2.4500 figure.

To learn more about how psychological levels impact technical analysis, check out DailyFX Education

Chart prepared by James Stanley; Cardano on Tradingview

In perhaps an...

The price of gold appears to be reversing ahead of the 50-Day SMA ($1800) as it pulls back from a fresh weekly high ($1796), and lack of momentum to climb back above the moving average may undermine the recent recovery in the precious metal as a ‘death cross’ takes shape in August.

US Retail Sales Miss Expectations

DATA RECAP: In what is likely little surprise to many, retail sales fell short of expectations across the board. The headline rate falling 1.1%, larger than the expected 0.3% drop. That said, the figures were not as dire as the BofA card data had suggested, having predicted a 2.3% drop in the headline. Of note, BofA card data has been rather accurate of late. Alongside this, the retail sales data also saw upward revisions to the prior month's figures. Therefore, while this data adds to the narrative of slowing economic activity in the US, this is unlikely to shift the outlook for the FOMC, given the major focus on jobs.

Economic Calendar

Source: DailyFX

How to Trade After a News Release

MARKET REACTION: In reaction to the retail sales report, the USD rose against its major counterparts, particularly against the low yielders (JPY and CHF) as US yields ticked higher. However, while I continue to favour upside in the...

After recording hefty double-digit increases over the last few weeks, the cryptocurrency market is taking a time out and giving back a small portion of its recent gains. With little news of note over the last few days affecting Bitcoin and Ethereum, recent action has been centered on the alt-coin space with various coins jumping, with some making fresh all-time highs.

Weekend Article:Bitcoin (BTC), Ethereum (ETH) Probing Multi-Week Highs, Alt-Coin Surge Continues

Prices via CoinMarketCap.

Dogecoin, Cardano Breakout as Bitcoin, Ethereum Coil for Next Major Moves

Bitcoin is now building a base on either side of $46,000 an area defined by the 50% retracement of this year’s sell-off from the April 14 high print. If this prior level of resistance continues to turn into support, BTC/USD will soon look to move higher again with a zone between $49,750 and $51,500 the next area of resistance. This zone is made up of a pair of prior sell-off highs, the 61.8%...

Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. While applying sound technical and fundamental analyses is key, having an additional feel for the market consensus can add depth to a trader’s view of forex and other markets. In this article, we outline what market sentiment is, how it relates to forex trading, and what the top sentiment indicators are.

The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. As a result, the ISM manufacturing, construction and services indicators can provide unique opportunities for forex traders, which makes understanding this data (and how to prepare for its monthly release) essential.

Talking points:

Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. These concepts will be explored in this article to shed some light on the mechanics of slippage in forex, as well as how traders can mitigate its adverse effects.

Our DNA FX quiz can tell you what type of forex trader is buried within your DNA. Simply answer the 14 questions honestly to learn which style of forex trading you are best suited for.

If you’re new to forex trading the results will help you develop your trading style and strategies, but even established traders might discover something about themselves they weren’t aware of…

The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA).The MACD displays a MACD line (blue), signal line (red) and a histogram (green) - showing the difference between the MACD line and the signal line.

The MACD line is the difference between two exponentially levelled moving averages – usually 12 and 26-periods, whilst the signal line is generally a 9-period exponentially smoothed average of the MACD line.

These MACD lines waver in and around the zero line. This gives the MACD the characteristics of an oscillator giving overbought and oversold signals above and below the zero-line respectively.

Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. This article will cover the shooting star reversal pattern in depth?and how to use it to trade forex.

Risk management is at the core of any good trading plan, without having a sound set of principles to follow a trader is doomed to fail. We outline rules and factors to consider when customizing a risk management game-plan right for you.

We understand the difficulties of trading, which is why we’ve put together a variety of guides designed to help traders of all experience levels.

Risk management is one of the most important aspects to successful trading, but far too often it’s overlooked. Job #1 for a trader is to always keep yourself in the game. A sound strategy and the discipline to follow it will go long way towards ensuring you stick around.

If you are in the learning stage, your objective is to keep losses very small until you figure out what you are doing from an analytical and strategy standpoint. Adhering to sound risk parameters early-on will go a long way towards building a foundation for later on.

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Technical analysis of charts aims to identify patterns and market trends by utilising differing forms of technical chart types and other chart functions. Interpreting charts can be intimidating for novice traders, so understanding basic technical analysis is essential. This article reveals popular types of technical analysis charts used in forex trading, outlining the foundations and uses of these chart types.

“Is there a best time frame to trade forex?” is a common question a lot of traders ask, especially those new to the forex market. The truth is, there is no single answer. It all depends on your preferred trading strategy and style.

Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Trend charts refer to longer-term time frame charts that assist traders in recognizing the trend, whilst trigger chart pick out possible trade entry points. This article will explore these forex trading time frames in depth, whilst offering tips on which can best serve your trading goals.

Talking points:

Double top patterns are noteworthy technical trading structures to learn and integrate into a trader’s arsenal. Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature.

Double Top Pattern: Main Talking Points: