Online Forex Trading Waves for Forex Sailing

Today you're going to learn the basic price movement of the Forex market! Of all the lessons on the rapid forex trading blog, this is the MOST important yet!

If you haven't read the previous posts on Forex Sailing, make sure you read "Timeframes for Trading Forex Sailing" and "Fundamental News for Forex Sailing" before reading this post.

Forex Candy-Canes & Umbrella-Handles

Ok, so now you're thinking that I've gone insane. Hear me out on this, soon you're going to love this terminology… I'll explain what candy-canes and umbrella-handles have to do with online forex trading very soon

Forex Trading Happens in Waves

You may have heard that online forex trading happens in price waves. Although many people say this, few people understand what it means. Forex trading doesn't happen in a straight line, the prices move up & down. To an untrained eye, this would look like an unpredictable mess!

Trading Forex Candy-Canes (aka Fibonacci Waves)

The most BASIC way that prices move in the forex market are in a wave pattern. The technical name for this pattern is a fibonacci-wave. I like to call them forex candy-canes because that's what they actually look like.

Here's how prices move in online forex trading:

Prices go up & then they come down. It's a pretty simple image. BURN THIS CONCEPT INTO YOUR BRAIN!!! YOU WILL NEED TO SEE THIS IMAGE ON FOREX PRICE CHARTS!!!

What's really cool about forex candy-canes (fibonacci waves) is that they usually obey certain price targets (see picture below):

Notice that you see the numbers 0%, 100% and 61.8%. These are the key numbers to remember. When forex prices move they start out at 0%, then rise to a level of 100% (new high), then they retrace to 61.8%. That's the pattern. It repeats itself again & again & again…

I'll come back to how to use this later, for now just understand this shape.

Background for Forex Sailing

In case you're wondering, I didn't invent this idea. Actually, this has been used in trading the financial markets for nearly the past 100 years. The Fibonacci ratio goes back to 12th century Italy & is found everywhere in nature. The Fibonacci sequence & trading forex online go together beautifully..

Ralph Nelson Elliot famously discovered that the financial markets (forex, stocks, commodities, real estate, etc…) moved in fibonacci wave patterns. I discuss the background of his theory in my "Elliot Wave Theory Introduction."  I even wrote a book about elliot wave theory (now out of print) nearly a decade ago.

Complicated Forex Trading Stuff Made Simple

Both Elliot Wave theory & Fibonacci theory can get quite complicated. Although both theories can forecast the future direction of forex trading prices to a high degree of accuracy, it could take you years to understand them fully (Elliot Wave counts are tough to do).

Here's the GIFT that I'm delighted to GIVE YOU!!!

You get all the benefits of this "magic crystal ball" without having to understand any complicated theory

These theories explain how the market moves. I've made the theory simple enough for a 5th grader, & you'll get all of the super power of these amazing theories.

Why Do I call them Forex Candy-Canes?

When I draw a fibonacci wave it's just 2 lines. On forex trading charts, the picture is actually more rounded and looks like a candy cane. See for yourself below:

Different Shapes & Sizes of Forex Candy-Canes (Fibonacci Waves)

Although I draw the fibonacci wave pattern in the same shape each time, on forex trading charts, they can look skinnier, fatter, shorter, taller.  After you understand the basic wave shape, you'll want to spot waves that look a little distored (see below):

(click image for larger view)

See how they kind of look like candy-canes in the image above?

I know it's a strange name, but it will help you remember this shape

Forex Umbrella-Handles (aka Downtrending Fibonacci Waves)

Online forex trading doesn't just move in an uptrend, prices also move down. When you flip a forex candy-cane upside down it looks more like an umbrella-handle (see below):

Just like candy-canes, downtrending fibonacci waves also get stretched out into different fat, skinny, tall, short and distorted shapes as well:

What's the Point of Fibonacci Waves?

You may be wondering why I'm teaching you these shapes. After all, "what's the connection with fibonacci waves, forex candy-canes, forex umbrella-handles, and online forex trading?"

The fibonacci waves happen in patterns. When you see how single waves fit together, you gain an incredible insight into the way the forex trading prices will unfold. You'll actually feel like you have a magic crystal ball for trading forex online.

Forex Trading Homework for Today

Before moving forward, open up a forex price chart. Look for candy-canes & umbrella handles. When forex prices trend, you'll see nice candy-canes and umbrella handles.

Fibonacci waves happen in all timeframes (except "tick" – too fuzzy).

Spend at least 15-30 minutes looking at your forex charts for these patterns. If you want to be a forex trading expert, you'll need to look at charts regularly.

• Use candlestick charts
• Look at several different currency pairs
• Look at several different timeframes
• See how waves connect (i.e. more than one wave in a row)

Using Fibonacci Candy-Canes & Umbrella Handles for Forex Trading Online

In my next blog post, I'll show you how fibonacci waves fit together to produce forex trading patterns. After you see how these waves fit together, I'll share the rules for Forex Sailing with you

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