The reversal on either a daily or weekly chart is the simplest of trend change formations. A downside reversal occurs when the price registers a new high during the course of a day (or week) and then closes the day (or week) sharply lower. Price action immediately following a daily or weekly reversal varies considerably. In some cases key reversals make the beginning of dramatic retracements of the preceding move, while in others the reversals simply mark the beginning of a more gradual trend change.

These are small top or bottom formations set apart by gaps on either side. The island consists of a
single day or reversal day and the entire formation is closely related to the daily or weekly reversal phenomena. The key difference is simply that following the gap on the island area, prices are held for several days before the buying (or selling) power disappears between trading sessions.

These patterns form when successive intermediate term highs or lows stop approximately at the same level. A double top is considered complete only if the decline from the second peak carries prices below the first stopping point. Double top can be subdivided into two rather instinct types, which might be called short-range and long-range. Short-range double tops generally form between 8 to 10 weeks and result form the kind of activity described as "previous high as resistance." Long-range double tops develop over much longer intervals and are frequently associated with a widespread reluctance to pay prices above many levels that have gained a certain historical respect. For psychological reasons, round numbers are often especially likely areas for longer-range double tops.

The head and shoulder top (as well as the inverted head and shoulder bottom) is historically one of the most popular and widely followed of chart formations. The left shoulder results from advances, followed by a relatively similar decline. The head is formed by a large rally falling short of the top of the head and subsequent decline that carries prices below the line connecting the body joints of the head - called the "neckline." Several ideas concerning head and shoulder formation have gained widespread acceptance
by technicians. First, the pattern is not complete until the neckline is decisively penetrated; unless and until this occurs no reversal is considered given. Second, after this confirming penetration, prices frequently rally back to the vicinity of the neckline before the final move begins. Third, the vertical distance that forms the top of the head to the neckline provides a measure of the extent of the decline likely to occur from the neckline before the final begins. The existence of this concrete measuring rule accounts for part of this information popularity among chartists. Fourth, a market is considered extremely vulnerable to step decline if the rally forming the right shoulder is unable to carry as far as the top of the left shoulder.

The Relative Strength Index (RSI) indicator calculates a value based on the cumulative strength and weakness of price indicated in the input price over the specific period in the input length. For that number of candlesticks, RSI accumulates the points gained on candlesticks with higher closes and the points lost on candlesticks with lower closes. These two sums are indexed, with the index plotted on the chart. The RSI plots as an oscillator with a value from 0 to 100. The direction of RSI should confirm price movement. For example, a rising RSI confirms rising prices.

RSI can also help identify turning points when there are non-confirmations or divergences. For example, a new high in price without a new high in RSI may indicate a false breakout. RSI is also used to identify overbought and oversold conditions when the RSI value reaches extreme highs or lows. This indicator automatically changes the color of the RSI plot when it exceeds either of the levels specified in the inputs oversold and overbought. Horizontal reference lines are also plotted at these levels as visual aids.

The Stochastic Slow indicator calculates the location of a current price in relation to its range over a period of candlesticks. The default settings are to use the most recent 14 candlesticks and to use the high and low of that period to establish a range and the close to establish the current price. The direction of the Stochastics should confirm price movement. For example, rising Stochastics confirm rising prices.

Stochastics can also help identify turning points when there are non-confirmations or divergences. For example, a new high in price without a new high in Stochastics may indicate a false breakout. Stochastics are also used to identify overbought and oversold conditions when the Stochastics reach extreme highs or lows.

The moving average may be the most widely used indicator. The two (2) line moving average indicator calculates and plots two simple arithmetic averages of the same prices specified by the price input from each of the most recent number of candlesticks specified by the length inputs. For example, the default setting is to calculate and plot a simple average of the closing prices of the last nine (9) candlesticks and a simple average of the closing prices of the last eighteen (18) candlesticks. The average of shorter length (also known as the fast average) will be more sensitive to current price changes than the average of greater length (also known as the slow average).

Moving averages are generally used for trend identification. Attention is given to the direction in which the averages are moving and to the relative position of prices and the averages. Rising moving average values (direction) and prices above the short moving average or short moving average above the long moving average (position) would indicate an uptrend. Declining moving average values and prices below the short moving average or short moving average below the long moving average would indicate a downtrend. Displaced moving averages plot the moving average values of a previous candlestick or later candlestick on the current candlestick.

The Momentum indicator calculates and plots the net change, expressed in points, between each candlestick's prices. The input price and the price of the number of previous candlesticks indicated in the input length help in finding the value of the indicator. The default settings calculate and plot the net change between the close of a candlestick and the close ten (10) previous candlesticks. Measuring current prices versus earlier prices sheds light on the pace of a trend and possible trend reversals. It may also be useful in identifying overbought and oversold conditions when the Momentum becomes extremely strong or weak.

Fibonacci Retracements are displayed by first drawing a trendline between two extreme points, for example, a trough and opposing peak. A series of nine horizontal lines are drawn intersecting the trendline at the Fibonacci levels of 0.0%, 23.6%, 38.2%, 50%, 61.8% and 100%. After a significant price move, either up or down, prices will often retrace a significant portion, if not all, of the original move. As prices retrace, support and resistance levels often occur at or near the
Fibonacci Retracement levels.

• Decisions on interest rates made by central banks such as the US Federal Reserve or the
  European Central bank (ECB) monthly;
• Quarterly GDP figures. Only preliminary national GDP figures generally have the effect of
  changing market sentiment;
• Market sentiment data. Market expectations are formed from one week to two days before the event. Participants become well positioned based on expectations. If the figures are not a surprise, profit taking is often the only result;
• Political Events such as National elections, the September 11th attacks and the war in Iraq are examples of events that have affected currency values;
• Major indices: inflation indices, Institute of Supply Management (ISM) in the US and the
  Purchasing Management Index (PMI) in Europe are also carefully followed by traders;
• National industrial production figures: US nonfarm payrolls (indicating new jobs created),
  Michigan sentiment figures in the US, the western German business climate or IFO index and the Tankan quarterly survey in Japan;
• There are times that governments through their Central Banks stand in the way of market forces impacting their currencies. Hence, they intervene to keep currencies from deviating markedly
  from undesired levels. Currency interventions have a notable and oftentimes temporary impact
  on FX markets. A central bank could undertake unilateral purchases/sales of its currency against another currency; or engage in concerted intervention in which it collaborates with other central banks for a much more pronounced effect. Alternatively, some countries can manage to move
  their currencies, merely by hinting, or threatening to intervene