Technical analysis patterns are graphic patterns, models that serve as an additional indication in the prognosis of the ratio swing. Some of the most widely used patterns are 4 types of triangles:
1) The ascending triangle – the trend is against a horizontal point of resistance. The lowest points of the chart rise steadily, which indicates the lay side is predominant. The trend is stronger than the resistance line, so in many cases this triangle will be a sign of an uptrend, more rarely – a downtrend. If the ratio crosses the level of resistance, the swing will be going upwards, if the ratio will cross the trend line, the swing will be going downwards.
2) The descending triangle – the trend is against a horizontal support line. The upper points of the chart lower evenly, indicating of the predominance of the back side. The trend is stronger than the line of support, so in many cases this triangle will be a sign of a downwards swing, more rarely – an upwards one. If the ratio crosses the line of support, the swing will be downwards and if the ration will cross the trend line, it will be upwards.
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3) The symmetrical triangle – the convergence of a descending resistance line and an ascending support line. Oblique lines create an expanded tunnel that indicates the strengthening of the pressure of the back and lay sides. If the ration crosses the line of resistance, the swing will be upwards, if the ratio crosses the line of support, the swing will be downwards.
4) The expanding triangle – the levels of the resistance and support move away from each other. Oblique lines create an expanded tunnel that indicates the weakening of the pressure of the back and lay sides. If the ration crosses the line of resistance, the swing will be upwards, if the ratio crosses the line of support, the swing will be downwards.
A clear view on the patterns of the technical analysis can be an additional signal for the beginning of a swing. Let’s return to the previous example one last time:
In the chart B a descending triangle can be clearly seen. Together with 3 distinctive lines (3 peaks on each), the connected chart where the rise of the ratio could be observed and the contrast of the money in both of the charts – the prognosis of the swing were meant to be true. The more signals there are and the stronger they are, the smaller the risk is when opening the position.
There are some patterns that are used les frequently than the triangles, like the double bottom, head and shoulders, flags, cups and other patterns, which we will not be looking at in this description. We can look at some of them just for the visual concept below:
To successfully use the technical analysis, a few things need to be understood:
- First of all – the technical analysis is NOT a 100% sure way to earn in a betting exchange. Just as any other strategy it has its success rates. You have to accept the fact that the market might not always go your way when you open a position. Only by controlling your losses correctly and not letting them be higher than the potential profits of a single successful swing can you gain a constant and proper flow of income.
- To reach a high success rate you need to be patient! The more signals indicate that the swing will begin, the bigger the chance is you will be able to catch it. The patience is needed to wait for these signals. Experience will develop your intuition. Trust the open positions and patiently wait for the swing to begin. Only those who are patient will finish what they have begun, the hasty ones will trip halfway.