The terms "overbought" and "oversold" are commonly used by analysts when talking about the condition of the market. These terms appear to be complex but they can be simple to understand. They are very important to comprehend when analyzing market movements for trading signals.

The head and shoulders pattern is a term used in technical analysis that refers to a pattern in which there is one high peak between two lower peaks, thus resembling a head and two shoulders. The lowest limit of both shoulders is called a neckline and it is used to find the crucial time in which buyers and sellers should exit or enter positions.

A channel is formed when the currency fluctuates in the middle of two parallel trendlines, i.e. between the resistance and support levels. To display a trend channel, we first draw a trendline. In the event of an uptrend, we draw this line above the lows of the price chart and in the event of a downtrend, above the highs. If we link a minimum of two highs, we get a straight line moving downwards. This can be employed to show possibilities for profit arising in a given trend.