You’ll need to download audioplus.mq4 file below, and save to your MetaTrader\Experts\ directory.

You’ll also need 2 .wav audio files serving as the signal to tell you either profit or loss.
These go in your “\MetaTrader\Sounds\” directory.

The inputs to be coded are :

Distance – distance of profit (not pips) for when the Expert Advisor sound is triggered
AudioPlus – the name of the sound file played when the price reaches set profit
AudioMinus – the name of the sound file played when the price reaches set loss

Compile (see add ea to metatrader, if you’re not sure) and everything should work fine.

Download:
audioplus.zip

Positive divergence = indicator moves higher as price declines.
Negative divergence = indicator moves lower as price increases.

But do note that with the forex market and currency pairs, this is a slightly artificial distinction, as compared with commodities, stocks etc. (because you could just turn the chart upside down).

It is held that divergences increase the strength of a signal. A positive divergence, ie. price declining, with RSI below 30 would increase the robustness of a signal based on a move back above 30 – as (perhaps) indicated in the chart, right.

We should all be reasonably familiar with the Bollinger Squeeze and Bounce – here’s the Bollinger Walk – (the Bollinger bands are 20-period 2 std deviation – ie. what your software will usually give you by default).

With a couple of excursions up towards the center line towards the end, the strong bearish breakout hugs on to the bottom Bollinger band, mostly closing outside.

Let’s consult the Bollinger rules:
“Price can, and does, walk up the upper Bollinger Band and down the lower Bollinger Band.”

“Closes outside the Bollinger Bands can be continuation signals, not reversal signals.”

Here’s the continuation of the same chart…

Well, it works!! Again, the Bollinger bands have given the classic signal, with the price in bullish reversal marching back through the centerline and off towards the upper band. The only question was when to take profit? Some traders would have taken the fakeout, if that’s what it was, with a level of support appearing 1.6200 (yep, the pair was GBP/USD from last week… )

There’s a lot to be gained from careful study of Bollinger bands… like any indicator, they won’t always perform for you quite as cleanly as they have here.

The RSI plots the magnitude of recent gains versus the magnitude of recent losses – so again, it’s an oscillator, ranging from 0 to 100. It takes a single parameter, the number of time periods used – 14 periods is common, (and was the recommendation of J. Welles Wilder, the popularizer of this indicator – like so many others).

Again, I won’t go through the full math here to produce the Relative Strength (it involves iteration and other slightly fancy work) because your software will do all this for you.
RSI is simply RS converted to an oscillator using: 100 – (100 / RS + 1).

So the average centerline value for RSI is 50. Over 50 suggests a bullish trend (average gains greater than average losses), while under 50 suggests bearish. But the main value of RSI is when it starts heading for the extremes, ie over 70, or less than 30.

Overbought/Oversold

What goes up must come down – and vice-versa.
An RSI of 70 suggests that the market may have peaked (i.e. the bulls have run out of steam), the market is overbought – and so RSI dropping back below 70 may indicate a reversal and can be taken as a signal to sell.
Similar, RSI under 30, then rising back above suggests that market may have bottomed out, and a bullish trend may be arriving shortly.

Centerline Crossover – some traders straightforwardly use a move above 50 for RSI as a bullish signal, and a move below 50 as bearish.

Here’s a real-life example:

As it turned out, a good signal as the market became oversold towards the end of the period and RSI dropped below 30 and then cut back up, heralding a good solid bull market. As always, life isn’t utterly simple with forex indicators – perhaps a less clear result from RSI on the previous trip above 70 and then below again – the trend was rather sluggish here…

The price has reached a level of resistance, bounced back off it… and then returned to test the idea one more time for luck… It didn’t work and now there’s a pronounced downtrend forming.

This is the double top, and, as usual, what holds true for the double top will also be so in reverse for the double bottom, which is even less polite.

The neckline is the level of the low between the two peaks. You’ll be looking to place a trade when the price breaks the neckline again…

Notes:
It’s relatively common for the second peak to fall short of the level reached by the first peak – another sign perhaps that the downtrend is on its way.

Double tops can sometimes turn into triple tops, or a head and shoulders – as always, however much analysis you do, it won’t always turn out the way you thought/wanted…

Important: this is a characteristic trend reversal pattern – so there has to have been a significant trend before… if not – and you see the occasional instance of this, even in charting books and certainly on some web page explanations – what they’re trying to make a trend reversal pattern out of is probably just noise.

Five waves - showing supply and demand (resistance/support) and tending towards an equilibrium price. The bullish formation is shown in the diagram.

As with the ubiquitous Elliott wave, Wolfe waves should be identifiable whatever the timeframe, long or short term.

The characteristics of the Wolfe wave pattern are:
Waves 3 and 4 must be contained in the channel created by 1-2
Wave (1-2) equals wave (3-4) – (showing a symmetry)
There are regular time intervals between all the waves.

Wave 5 is the entry point – it breaks the trendline established by waves 1 and 3
Waves 1 and 4 can be extrapolated to create an estimated price for 6

Notice that the patterns produced are not unlike ascending/descending triangles, but with this there’s a definite final price direction proposed.

Wolfe waves are also a starting point for some distinctly fey theory where a bit too much importance gets loaded on to the pattern and harmonics – theory probably ok as far as it goes, real-life application a lot more doubtful…

Bearish - a chart pattern that consists of a small open/white candlestick with short shadows is followed by a large black candlestick that engulfs the previous, open and close are greater/lower than the total body of the previous candlestick – (and the converse for a bullish engulfing pattern) – see also harami crosses for the opposite of this pattern.

Entry: an engulfing pattern has formed…
Exit rules: stop-loss 3-5 ticks above the absolute high/low of the previous candlestick.
take-profit stop twice the distance of the stop-loss (risk-reward 2:1).

In general, this is felt to work better on a short timescale – 5, 15-min charts – ie. getting towards scalping to some points of view… And it’s vital to consider previous trend, performance etc.

My own view is that this is barely above the obvious…

(Referring to days as the time period, but the principle is universal.)

- So, 2 days when the price range hasn’t shifted implies indecision in the market.
If at the end of a pronounced trend, that trend would appear to be complete…

A special case of the Inside Day is the Harami cross – the second candlestick is a doji contained within the body of the first period’s candlestick

One useful technique is if an inside day appears at the end of a significant trend, a strengthened signal is obtained if the pattern is close to an identified level of support/resistance.

But indecision in the market is always at the mercy of news events – all the fancy tech analysis isn’t going to help there…

So look at RSI and MACD (moving average convergence/divergence) and let’s say they give the same signal – so what? These have both been derived from closing prices, without any other data input.
What they can’t do is truly confirm each other.
If they do produce different signals, then it’s largely entropy and inherent imperfection of the indicators themselves.

Price range over the periods, volume – these need their indicators too, to give a balanced input. Only then do you stand a serious chance of making successful decisions.

Colinearity, fancy word, but simple enough concept to remember – but you’ll often see people holding up 4-5 colinear indicators in a bunch that fooled them with a dodgy signal and plaintively wondering why.

Your toolbox needs some variety…

A Hammer occurs in a downtrend = bullish reversal, the market’s going up again
A Hanging Man occurs in a uptrend = bearish reversal, the market’s going down…

In practice, of course, these candlesticks don’t necessarily guarantee a solid reversal – price may edge back again, or drift in a level market, with support/resistance. They’re a sign that the end of the trend is near – if the next time-period confirms the reversal, time to consider your position…

And then the inverse – the Inverted Hammer and the Shooting Star.

Again, short bodies, but this time short lower shadows, long upper shadows.

Here’s an example from a real chart, a hammer in a downtrend, that led to steady reversal.

Note also the small up candlestick 2 time periods earlier, that might have caused you to think “buy”, and have pressed the trigger a bit too early….

And one other thing – falls are often steeper than rises. In forex, with a currency pair meaning that while one currency falls, the other rises, there’s no logic to this, unlike the market in stocks. But it still seems to happen – and it does mean that catching a downtrend makes you the money faster.