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The FX Bootcamp Guide to Strategic and Tactical Forex Trading by Wayne McDonell

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PART ONE SUMMARY

Following are the key takeaways for Part One:
• Support and resistance identify the boundaries in ranging markets.
• A break of support or resistance can identify continuation of trends.
• Support can also become resistance and vice versa, reversing roles on breaks.
• Drawing too many support and resistance lines can easily become confusing.
• MACD is an indicator made up of three subindicators, only one of which is actually the MACD. The other two are signal line and histogram.
• MACD is traded primarily off of line crossovers, divergence, and when we see extreme differences between signal line and MACD (also shown as dramatic increase in histogram bar length).
• Divergence can be a powerful tool but needs confirmation as it is a leading indicator and can at times lead price action by quite a bit.
• Bollinger bands are a useful tool. However, they should not be used in isolation, but in combination with other indicators to justify your trading decisions.
• Bollinger Bands indicate the current level of volatility in the market.
• Markets move from periods of low volatility to high volatility, or from range bound to trending and back.
• The longer and more narrow a Bollinger Band tunnel, the bigger the breakout.
• Bollinger Bands can be used as both a reversal and a breakout indicator but must be used with other analysis tools to filter out the false breakouts and false reversals.
• Fibonacci retracements are derived from a naturally occurring number sequence. ...

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