CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Technical analysis (definitions)

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  • Line chart is used to represent data over a given time span and connects a series of data points with a continuous line. This is the most basic type of chart which shows an asset's historical price action, and most often uses only closing prices.
  • Bar Chart, sometimes abbreviated OHLC (open, high, low, close) - each tick on the chart provides the price at open, highest price, lowest price, and last or "close" price for a given time period.
  • Candlestick chart (also called Japanese candlestick chart) is a style of financial chart used to describe price movements of a given asset. It originated from Japanese rice merchants and traders to track market prices and daily momentum hundreds of years before becoming popularised in the United States. Each candle in the chart shows the Open, High, Low, and Closing price of a security. The body of the candle is shown as the difference between the Open and Close price. The candle wicks show the difference between the High and Low and the Open and Close.
  • Support / Resistance - levels set in areas where the price will most likely have problems with continuing the current trend, will stop or be rebounded. This is because buyers (support) or sellers (resistance) pile up at a given price level. Supports are set below the price and stop declines, while resistance is set above the price and stop the asset from further appreciation.
  • Trend - a general direction of a market or an asset's price. Trends can be upwards (bullish), which are marked by rising data points, downwards (bearish), which are marked by falling data points or sideways (flat), which occur when the forces of supply and demand are nearly equal. There is no specific timeline for a direction to be considered a trend, but overall, the longer the direction is sustained, the more qualified the trend becomes.
  • Time frame, TF - unit of time in which the price is measured. For different chart types, different price values are measured. In the case of Japanese candles, we take into account the opening, high, low and closing in a given time period, e.g. 1 hour. The most popular time intervals are M1 (1 minute), M5 (5 minutes), M15, M30, H1 (1 hour), H4, D1 (day) and W1 (week). Sometimes, we can also meet other less popular time intervals, such as 6H (six hours) or 12H (twelve hours).
  • Price Patterns are formations which appear on financial instruments charts, which have shown to have a certain degree of predictive value. The most basic form of chart pattern is a trend line. Other most popular chart patterns include head and shoulder formations, double and triple tops and bottoms, pennants, flags and wedges, and are used by many traders due to their easily recognisable pattern and accuracy.
  • Candlestick pattern is a movement in prices shown graphically on a candlestick chart that sometimes can predict a particular market movement. We can distinguish between bullish (i.e. hammer, morning star, bullish engulfing) and bearish formations (i.e. evening star, hanging man, bearish engulfing). The bullish patterns indicate that the price may rise in the near future, while the bearish patterns warn of potential price drops. No pattern works all the time as the candlestick patterns represent trends in the price movement, not guarantees.
  • Indicators and Oscillators - an indicator is a mathematical calculation based on price or volume of a given asset and is used to predict price movements in the future, for example moving average (MA) or ADX. Oscillators are the technical indicators that operate by plotting the output of a trend indicator between two extreme values and are used to identify overbought and oversold conditions. The most popular oscillators are the moving average convergence-divergence (MACD) indicator and the relative strength index (RSI).

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory.

The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments.

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This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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