Saturday, February 26, 2011

The Importance of chart formation observation - head and shoulder.

Most forex beginners may not aware of the importance of chart formation. It is because it is not so obvious to observe from the live daily chart. However for the experience traders they always watch out for this kind of key structure, because it brings the biggest impact to the currency market movement.

In this example let's take the head and shoulder chart formation which frequently occur in daily trading. Let's observe closely how much impact the head and shoulder formation on the chart movement.

Even though the formation is not always so obvious to see, but the experience traders always notice this kind of patterns. And of course the impact is more effective if combine with technical indicators signal (i.e. MACD, Stochastic) that support the condition.

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