FOREX Pattern Dragon
Pattern Dragon davolno common in the forex market and other financial markets and allows traders familiar with graphical analysis successfully get by knowing the ins and outs of building and further development of the graphical model, the desired profit .
In technical analysis, forex recognition of different patterns is defined as the process by which traders "recognize current events, while identifying certain predictable pricing model".
Although forex patterns are rarely repeated in the same commercial level or in the same intervals, but still there are patterns that repeat themselves in certain ways and certain sequences.
ability to recognize such patterns and trade according to certain rules on the data graphic models to help you become a successful forex traders. In this case the successful identification and chart pattern trading on it shall consist of an initial reference point and the basic rules on trading methodology. This forex strategy, we consider one of the patterns, which is called the Dragon , as well as substantiate the basic rules of trading forex this pattern.
The forex market is very rarely passes from bearish to bullish status, and on the contrary (except V-bottoms and a V-top), without some sort of series of price trends, which are tested in-formed support and resistance levels. At the heart of a dragon pattern are the same kind pivots and served us a good method for making deals for them.
Pattern Dragon can be found at all time intervals and for all currency pairs.
the graphical model of the Dragon:
Pattern Dragon is very similar to the pattern or pattern W " double bottom ", but it has a few distinctive rules and targets. Accordingly, the inverted patterns " Dragons " similar to the pattern M, or " Double Top ".
Dragons very often appear on the market about the market bottoms. Like " double bottoms ", patterns of dragons represent a superb opportunity to open trade with low risk in relation to the possible profit potential.
Pattern Dragon begins with the formation of "head", then the price on the chart is reduced and thereby forms a 2-ve " dragon claw ". Very often the difference between the data by 2 is 5 feet 10%. On the 2nd leg formed by a signal for the market reversal - a reversal bar or divergence with oscillators (eg MACD, RSI, Stochastics, etc.) growth of transactions, which follows the rotation of the market prices, is also a good sign reversal . In forming the pattern, we can draw a trend line from " dragon's head " to its "hump".
Once the price closes above the trend line, and we thus get a graphical confirmation (or get a confirmation on the above oscillator), therefore it is a signal of trend reversal. 2nd confirmation of this pattern, forex, is closing prices above the level of the resulting " hump ", which is a maximum oscillation between the two resulting "legs dragon".
Structure Pattern Dragon:
A - "Dragon Head"
B - "The first leg of the dragon"
C - "Hump the Dragon" (must be within 0.38 - 0.5 from AB)
D - "The second leg of the Dragon" (has a tendency to be 0.618 or 1.27 from the AB)
E - Breakdown of the trend line formed (signal to open a trading position to buy)
F - The first profit target - 1.27 CD
G - The second profit target - 0,886 - 1.0 Sun
H - The third goal of profit - 1.38 AB
I - safety stop-loss orders must be placed a few ticks below the lowest minimum of two feet a dragon.
In Figure 3 you see a pattern Dragon on a 30-minute chart (M30) Futures Dow E-mini. January 3, 2007 market price formed head Dragon . After that, the price dropped to 8 January, until, until it was established the first leg of the Dragon. January 8 was an attempt to restore to the price level of 12 520. Then we can draw a trend line connecting the vertex of the head Dragon and the top of the first leg Dragon . A January 10 was formed second leg of the Dragon, the price fell back on the chart from the top of the hump Dragon to the level of 12 420. Final confirmation of the pattern formation Dragon was closing market price over the line formed around the trend level of 12 500.
1. Open trading position on the purchase price at closing price of 12 520 over the maximum breakdown bar.
2. Profit target - 1st oscillation maximum preceding leg Dragon (1) at 12 570 and zone dragon's head at the level of 12 640.
3. Place a safety stop-loss order under the lowest low-educated 2-foot level about 12 410.
inverted pattern of the Dragon reminds of a " double top ". Terms of trade are the same as for the direct pattern, "Dragon". "Hump dragon" is often formed at a distance 38-50% of the "dragon head" until the 1st of his legs. Closure of candles formed under the trend line generates a signal at the conclusion of the trading position on the sale. Closure of candles formed below the hump once again confirms the formation of the pattern, "Dragon" and provides yet another signal to the deal on the sale.
1. It should open a trading position in the market under the trend line formed.
2. Profit target - swing a minimum, which precedes the first "foot dragon".
3. It is necessary to place safety stop-loss order above the high of the second leg dragon.
Conclusions pattern forex "Dragon":
Patterns of "Dragon" represent a variant of 2-tops and double bottoms. These patterns allow us to find the forex trader the important turning points in the forex market and predict the transition from one trend to the opposite. Although graphical models "dragon" is found rarely in davolno daily and weekly charts of price charts, they are very often found at smaller intervals, and trade on these patterns gives a great chance to conclude it was a profitable trade. Also, you can add to the additional indicators forex for greater reliability in trade on it.