Determining support and resistance levels is work that a trader has to do every day. We have already mentioned its difficulties (). Let us only recall that a Forex trader needs technical levels so that, based on them, he can draw up a work plan for the trading session and create his own behavioral tactics.

One of the most optimal methods for determining technical levels is found in Axel Rudolph at Dow Jones Newswires.

Examples of technical levels by Rudolf Axel

To better understand what we are talking about, let's look at examples of technical analysis by Rudolf Axel. Thus, in the Dow Jones Newswires column, based on rolling charts for 24 hours and 7 days, he published an analysis of European currency markets on July 7, 2006, the main conclusion of which was the statement that the price American dollar will decrease:

Table 1. R. Axel's forecast for 07/07/2006 for pairs with the euro in the numerator

After the levels were determined, Axel made the following conclusions:

1. Euro/dollar during the day. The movement of the pairs is directed towards the second resistance at 1.2789 (Fibonacci retracement level at 61.8%
   June wave of decline). If this level is broken, the pair will continue to rise to 1.2842. On the other hand, the nearest support for the pair lies at the 1.2758 line (Sunday's low). If, contrary to expectations, this low is broken, the pair will head even lower at the next support at 1.2730.

   Euro/dollar on the weekly chart: Uptrend.

2. Euro/pound during the day. The pair is expected to reach minor resistance at 0.6968. If that level is broken, the pair will target the resistance at 0.6988. The first support is located at 0.6942. If this minimum is broken, the rate will go even lower - until the next support of 0.6920.

   Euro/pound on the weekly chart: Uptrend.

3. Euro/yen during the day. The pair is targeting minor resistance at 147.50 until first support at 146.96 (Thursday's daily low) is broken. A rise above 147.50 will test the minor resistance at 147.80. If the rate falls below 146.96, the pair will go to the support line at 146.55 and then 146.20.

   Euro/yen on the weekly chart: Uptrend.

4. Euro/CHF during the day. Intraday EUR/CHF: The pair will again test minor resistance at 1.5713 (Wednesday's high). If this level is overcome, the pair will test its strength at the next resistance of 1.5742. The first support is located at 1.5689 and the next at 1.5669 (Thursday morning low).

   Euro/franc on the weekly chart: Uptrend.

Unlike these currency pairs, the following on the weekly chart meet resistance and support levels, as a result they may go into correction. Rudolf Axel identifies them as a separate group.

Table 2.R. Axel's forecast for 07/07/2006 for pairs encountering strong levels of resistance and support

Regarding these currency pairs, Rudolf Axel makes the following predictions:

1. Pound/dollar during the day. The pair is targeting minor resistance at 1.8415. If this level is broken, the next target will be 1.8475. Minor support is located at 1.8320 (June 23 high). The next low is 1.8270 (June 27 high).

   Pound/dollar on the weekly chart: rebound from support level.

2. Dollar/yen during the day. The pair is down again and is targeting minor support at 115.02. If this level is broken, the pair will target support at 114.34. The first resistance is located at 115.84 (Wednesday's high).

   Dollar/yen on the weekly chart: growth is limited by the resistance line.

3. Dollar/franc during the day. The pair is expected to decline towards minor support at 1.2262 while gains are capped by resistance at 1.2364. If this resistance level is broken, the pair's growth on Friday will be limited by the secondary resistance at 1.2396. Below 1.2262, support is located at 1.2197 (Wednesday's low).

   Dollar/franc on the weekly chart: growth is limited by the resistance level.

4. AUD/USD intraday. The pair is targeting minor resistance at 0.7481. If this level is broken, the pair will target 0.7503 and 0.7510, where the highs of June 9 and 12 are located. First minor support lies at 0.7449 (Friday morning low). This support level should hold if the pair tests it to the limit. If this level is broken, the pair’s decline will be restrained by the secondary support at 0.7339.

   Australian/US dollar on the weekly chart: rebound from support level.

*The pivot point is equal to the sum of the previous day's high, low and closing price divided by three.

Signature: Dow Jones Newswires, PRIME TASS.

MasterForex-V Pivot_RS_session indicator

Students of the Trading Academy MasterForex-V developed our own indicator Pivot_RS_session. It saves time, since the trader no longer needs to chart a turning point (pivot), as well as three levels of resistance and support. Everything happens automatically (see).

Rice. 1. MasterForex-V indicator on the chart of the eur/usd pair
Rice. 2. MasterForex-V indicator on the chart of the gbp/usd pair
Rice. 3. MasterForex-V indicator on the chart of the usd/chf pair
Rice. 4. MasterForex-V indicator on the chart of the aud/usd pair
Rice. 5. MasterForex-V indicator on the chart of the usd/jpy pair

Advantages of technical analysis using the Rudolf Axel method

Using Rudolf Axel's technical analysis methods in Forex, a trader easily and quickly processes the most important information about the state of currency pairs. This, in turn, allows you to make decisions that provide a favorable balance of profit and risk when making trading transactions. Besides:

1. R. Axel's analysis is not only simple, but also very convenient. Every day, the trader sees pivots (turning points) and three levels of resistance and support for eight currency pairs in the Forex market.
2. Already in the very title of each analytical review, R. Axel clearly suggests where the main vector of movement of currency pairs is directed. This makes life even easier for a trader.
3. In the pictures above you can see how the allied currencies, located behind the pivot, broke through resistance or support levels 1, 2, 3 as the US dollar fell.
4. Using this information, it will be easy for a trader to make a profit. The same figures show that it is possible to use the potential for movement of pairs between the first and third levels, since breaking through one directs the financial instrument to the other.

Note: We recommend that you familiarize yourself with the content of the discussion between students of the MasterForex-V Trading Academy and one of the managers of the Forex Club DC. While publishing the Dow Jones Newswires daily, this dealing center for some reason forgot about the analytical reviews of Rudolf Axel. In the end, under pressure from Academy students, these materials nevertheless appeared on the pages of the DC website.

Disadvantages of technical levels of the Dow Jones Forex agency

However, nothing is ideal in the world. Many questions arise both for the Dow Jones agency and for Rudolf Axel himself. Let's outline some of the problems that ordinary traders face:

1. Traders have fair doubts whether a system can be considered reliable if its mechanism is not clear. And another question: what to do if:
   • Axel's levels won't be published?
   • Will Axel make a mistake?
2. How can I independently determine Rudolf Axel's levels a few hours before they are published?
3. Are there any sources from which you can get R. Axel levels at least half an hour to an hour earlier than they appear in the Dow Jones Newswires of the leading dealing centers in Russia? (Such sources exist; they are used by students of the MasterForex-V Trading Academy).
4. Why, if you calculate the pivot (turning point) of currency pairs using the method “*The turning point is equal to the sum of the high, low and closing price of the previous day, divided by three,” its location does not coincide with the one that will be written about in R. Axel’s analysis? Do traders think wrong somehow?
5. How and by what OTHER method can you check R. Axel levels? For example, for the day we mentioned, July 7, 2006, BEFORE the news was released, a 4-1 resistance level was calculated for the euro and pound, which became a local peak in the American session (pound - 1.8540, euro - 1.2860).

Let's look at another example. On July 10, 2006, Axel indicated the third support level for the pound at 1.8415. At the same time, the majority of students of the Trading Academy MasterForex-V closed at 1.8365 - the local minimum on July 10, 2006. Therefore, another question arises: how, at the beginning or middle of the session movement, can one determine with an accuracy of 1 point (preferably!) the local minimum of the trading day, during which the pound passed 160 points?

Rice. 6. Axel levels and real movement of the gbp/usd pair 07/10/2006

You can get answers to these and other questions by completing training at Trading Academy MasterForex-V. Determining resistance and support levels, as well as intraday pivots, is given special attention here, considering them one of the most effective tools for making a profit in the Forex market. Note that “the most effective” and “important” does not mean “the only one”. In fact, for stable work, a trader needs more knowledge, which we will talk about in future chapters.

And you can read more about Rudolf Axel’s methodology in the chapter “World-famous traders and analysts of the world: Rudolf Axel (Axel Rudolph on the Academy forum).

In particular, the MasterForex-V Academy recognizes Axel levels as a reliable analysis technique for novice traders who have not yet developed their own system for assessing market conditions and making the right decisions to make profitable transactions.

Learn more about Dow Jones reports

ABOUT news Dow Jones for Forex talk about a mirror largest economy peace! This is due to the fact that financial reports and analytical data published under the designation DJ are formed on the basis of the industrial index of the same name, which in turn is one of the most important stock indices USA. One segment covers a wide range of areas, particularly tracking the stock values ​​of America's thirty largest companies, a heavyweight factor in global economic impact.

The formula for calculating this index includes the average of daily stock quotes of its constituent organizations of various types (industrial, IT, financial, etc.). Based on this we can say that Dow Jones Forex news- this is a reflection of the movement and development of all industries American economy, which in turn allows you to generate news reports that are relevant for other regions.

Analysis of daily fluctuations in a given index through the appropriate information channels, analytical environment, foreign exchange market traders can more carefully consider their decisions regarding working with a particular asset, as well as opening or closing certain transactions.

The profitability of such work lies in the fact that the stock and currency market are closely related to each other.

What Dow Jones reviews and analyzes

Forex news on Do Johnson involves considering a huge amount of information received daily. Here are just some of the areas in which the analytical review is proceeding, and about which news has been posted over the last period.

1. Growth in European stock indices against the backdrop of the ECB meeting in Tallinn (and other capitals of the world). Similarly, there may be drops and increases in the volatility of trading instruments, which is considered in connection with certain events.
2. Getting additional profit stock market USA, which was facilitated by unexpected election results in the UK. In this example, you can clearly see how two economies of countries separated by an ocean interact!
3. The growth of American futures due to the preservation of the level interest rates. As you can see, an increase in value can be influenced not only by a sharp change in indicators, but also by maintaining them at the same level, that is, maintaining stability in the economic sector.
4. Smooth sliding of the value of the pound sterling during the election campaign in the UK. This example shows us that political events influence currency quotes no less than economic ones.

The Dow Jones Industrial Average (DJIA) (NYSE: DJI) is one of several stock indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow.

The index covers the 30 largest US companies. The prefix "industrial" is a nod to history - many of the companies included in the index currently do not belong to this sector. The index was initially calculated as the arithmetic average of the stock prices of the covered companies. Currently, the calculation uses a scaled average - the sum of prices is divided by a divisor, which changes whenever the stocks included in the index undergo splitting or consolidation. This allows the index to remain comparable, taking into account changes in the internal structure of its constituent stocks.

Opportunities for a trader

Fairly moderate volatility and propensity for protracted trends make this index CFD a good tool for patient investors.

In the late 90s, an article appeared in the Wall Street Journal "Centennial of the Dow", which talked about the possibility of predicting the upcoming course of market movement, based on the results of previous trading. This article is from the famous Dow Jones, the creator of the popular Dow Theory and the Dow Index.

Dow Jones Theory, is successfully used now in modern technical analysis. This theory has been refined and tested several times. And with the introduction of computer technology, it has become easier to perform and display calculations in .

Often technical analysts do not even realize that most of their supposedly modern technical market analysis tools contain in their base the concepts and principles of the theory laid down by Dow Jones.

As for the Dow, it originally consisted of 11 stocks of several companies, 9 of which were Railways. In 1897, the index was divided into 2 parts: it consisted of 20 railway companies and 12 industrial companies. And in 1928. the index of all industrial companies, at a theoretical level, contained at least 30 shares. Then in 1929, an index of utility companies appeared.

Dow Theory - Historical Facts

But it all started in 1884, when the Dow Jones index was released. Then, as a symbol of deep respect and gratitude for the work of Charles Dow, colleagues from the Association of Technical Analysts presented a silver cup to his firm called Dow Jones & Co., founded in 1882 by Edward Jones and Charles Dow.

Part of the text from the congratulatory letter read as follows: “This merit once again confirms the universal recognition of the contribution that the distinguished Charles Dow has made in the field of investment analysis.

Its index is the predecessor of the most accurate barometer of activity on the market; it was and remains the main tool in the work of technical analysis analysts, despite the fact that 80 years have passed since the death of Charles Dow.”

Unfortunately, Charles Dow did not have time to write a theoretical study. The only thing he managed to do was post some of his own thoughts on theories about the behavior of the stock market in the Wall-Street-Journal, they were posted in the 90s. After this, in 1902. Charles Doe passed away. After his death in 1903, the articles were rewritten in the book “The ABC of Speculation in the Stock Market,” the creator of which was S. Nelson.

By the way, the term “Dow theory” was carefully described for the first time specifically in this book. In the introduction, Richard Russell contrasts the contributions made by Charles Dow's own theory to the stock market with the contributions made by Sigmund Freud to the formation and development of today's psychiatry.

VIDEO: Charles Doe - a little history

What is so special about Charles Dow's contribution? Why was his theory so valued and valued in technical analysis?

The point is that all modern technical analysis is based on this Charles Dow theory and without it, technical analysis makes no sense.

- This is a kind of predecessor of technical analysis. And the correct approach to the study of technical analysis, first, would be to study at least the main points of its theory.

Thanks to the Dow Jones theory, technical analysis now contains the main aspects of his theory, such as “prices take into account all information”, “characteristic direction of price movements”, “divergence and confirmation”. As we have already said, at first the ideas of the Dow Jones theory were set out in the editorials of the Wall-Street-Journal, and a little later, they were published in the book of Dow’s colleague, W. P. Hamilton, who replaced him as the editor-in-chief of the Journal.

The publication was published in 1922, under the title “Stock Market Barometer”. Subsequently, the description of the Dow theory continued in a book entitled “Dow Theory”, the creator of which was Robert Rea, published in 1932. At first, the ideas and principles of the theory, set out on paper by Charles Dow, were used to analyze his own indices, railway and industrial. But this is far from their only purpose. Also, the principles of Dow theory are often used when making a huge number of analytical conclusions on.

Focusing on this theory, the following points can be highlighted:

In technical analysis, price prediction is based on the characteristics of past trades.

Two of which are very necessary:

cost per asset. Prices are simple to understand and can be easily calculated from their meaning, which makes the price indicator a very important part of the analysis.

trading volume. Based on the theory, it means the total number of transactions performed over a certain period of time, expressed in monetary terms. Such values ​​will naturally be more difficult to find, but it is possible.

The main provisions of the Dow Jones theory

Indexes take everything into account. This theory says: every factor that can somehow influence demand or supply will in any case be reflected in the dynamics of the index. Often these changes are unpredictable, but still, they are certainly taken into account by the market.

According to the Dow Theory, there are 3 types of trends predominant in the market:

With an obvious downward trend, each subsequent decline and peak is lower than the previous one. With an obvious upward trend, each subsequent decline and peak is higher than the previous one. With a pronounced horizontal, each subsequent decline and peak remains approximately at the same level as the previous ones.

All three types of trend are shown in the following figure.

Dow Jones, in his own theory, also identified 3 types of trends: primary (main), secondary (intermediate) and minor (short-term). The most important thing is the primary trend, the duration of which can reach a year or even a couple of years. The secondary trend corrects the main trend, lasting from 3 weeks to 3 months. According to the Dow theory, a minor trend lasts for three weeks and occurs with short-term fluctuations within the boundaries of the intermediate or short-term trend.

The primary trend in Dow theory is divided into three phases:

Congestion phase. Here they open buying positions, since all the unfavorable economic aspects have already been taken into account by the market.

The advent of phase 2 occurs when those traders who mainly use technical methods of following the trend join the market.

The trend is now entering its third phase, with the entry of the general public.

The situation in the market is heating up, fueled by the media. The volume of speculation is growing rapidly. At this step, experienced traders, who “accumulated” the trend during the last rise, begin to “spread”, and here the trend ends.

In addition, according to the Dow theory, the indices should partially confirm each other. He assumed the railway and industrial index, believing that any significant signal for a decrease or increase in the market rate would certainly be reflected in the values ​​of these two indices. The total trading volume should indicate the nature of the trend. On a theoretical level, volume usually increases in the same direction as the main trend. As long as there are no signals about a change in trend, it will remain in effect.

I would like to highlight that the “Dow Theory” is of great importance when using technical analysis, because it is inextricably linked with this theory.

We strongly advise anyone who wants to become a successful trader to begin their research by examining the main points of the Dow Theory. The entire theoretical part of technical analysis is based on the principles and indicators of the theory. By applying this theory in practice, a novice trader will quickly grasp the essence and theoretical basis of technology. analysis.

In this article, we have covered only part of the thoughts and principles of Dow theory. More comprehensive information regarding the Dow theory and its principles of market analysis, as well as the 3 main postulates, can be found in the section “ Technical analysis market".

All about the Dow theory in the video: