Forex pattern “Bow tie” is a nothing more than the intersection of 3 moving averages , periods and styles which you will learn in the future considering the forex strategy, in a certain order, and although the best one for its use is a daily chart , but it also It can be applied and when trading intraday .
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As you know, trends in the forex never last forever, they often exhaust themselves and themselves, and usually after that there is a new trend, which is directed in the opposite direction of the previous. But well-established trends usually last garazdo longer than many traders predict them.
But oddly enough, the market always gives us a signal to the fact that the trend is starting to turn around , and before a new trend continues, usually occur small corrective movement.
Figure 1. Trading in the forex conversions. With explores wait for a trend change, and then enter the market in the first corrective movement , if the new trend will make the confirmation.
One very interesting transition patterns is a pattern of “bow-tie”(English -. Bow Tie). This pattern is based on the use of forex fewsimple and exponential moving averages to determine when a change in trend in the market.
General rules for the pattern “bow tie”:
To determine this pattern using the 10-day simple moving average (SMA), the 20-day exponential moving average (EMA), as well as the 30-day EMA . 10-Day SMA, the trader takes the ‘true’ average price over the past two weeks or 10 trading days.
For longer-term moving averages are usually ispolzuyutsya exponential MA, as they “weigh” all the data. Although in them and take into account the long-term trend of Mr arynke, but they will keep up with the price, as very greater weight to give them the latest data.
Consider the basic rules for the transaction to purchase (To qualify for the transaction to sell, you need only to deploy the “rules for the purchase”):
And so we use a simple SMA with period 10, the exponential EMA with a period of 20 and 30 EMA with a period (these moving averages to trade MT4 terminal called Moving Averages):
1) These moving averages are due to come together and re-disperse , thus changing the order with the order of the inherent downward trend (10-SMA <20-EMA <30-EMA) on the order inherent in the rising price trend (10-SMA> 20-EMA> 30- EMA). Ideally, the time
Pattern “Bow tie”