Forex Terms T



Tan Book. An economic report prepared by the Federal Reserve for FOMC meetings.

Tankan Economic Survey. The Japanese equivalent of the American Tan Book, which is released by the Federal Reserve. The survey is released on a quarterly basis.

Technical analysis. The chart study of past behavior of commodity prices for purposes of forecasting their future performance.

Theory of elasticity. A model of exchange rate determination stating that the exchange rate is simply the price of foreign exchange that maintains the BOP in equilibrium. The degree to which the exchange rate responds to a change in the trade balance depends entirely on the elasticity of demand to a change in price.

Theta (T) or time decay. Occurs as the very slow or non-existent movement of the currency triggers losses in the option's theoretical value.

Three Buddha top formation. A reversal candlestick combination. It consists of a head-and-shoulders formation, or three consecutive rallies in which the first and the third are of approximately the same height, and the second is the highest.

Threshold of divergence. A safety feature for the EMS that creates an emergency exit for currencies that become the singular focus of various adverse forces. The threshold of divergence indicates when the specific country with the pressured currency should take additional steps other than simple central bank intervention in the foreign exchange markets.

Time decay. See Theta.

Time value (time premium or extrinsic value). The difference between the option premium and its intrinsic value.

Tohbu (gravestone doji). A reversal candlestick formation.

Tomorrow/next (T/N) deal. A foreign exchange deal that matures the next business day, or one day prior to the spot date.

Tonbo (dragonfly). A reversal candlestick formation.

Traditional (Charles Dow) percentage retracements. Occur at 33 %, 50 %, and 66 %.

Transaction exposure. Potential profit and loss generated by current foreign exchange transactions.

Translation exposure. The risk of change of the consolidated corporate earnings as a result of past volatility in the base currency.

Trend. The general direction of the market, as shown by the significant peaks and troughs of the currency fluctuations.

Trend-line. A straight line connecting the significant highs (peaks) in a down-trend, and the significant lows (troughs) in an up-trend.

Triangle. A continuation formation that resembles the outline of a pennant, but without the pole. It consists of a brief consolidation period within a solid and steep upward trend or downward trend. The consolidation itself tends to be sloped in the opposite direction from the slope of the original trend, or simply flat. The consolidation is bordered by converging support and resistance lines, making it look like a triangle. When the currency resumes its original trend by breaking out of the consolidation, the price objective is the height of the triangle, measured from the breakout price level.

Triple bottom. A bullish reversal pattern that consists of three bottoms of approximately equal heights. A parallel (resistance) line is drawn against a support line, which connects these tops. The break of the resistance line generates a move equal in size to the price difference between the average height of the bottoms and the resistance line.

Triple top. A bearish reversal pattern that consists of three tops of approximately equal heights. A parallel (support) line is drawn against a resistance line, which connects these tops. The break of the support line generates a move equal in size to the price difference between the average height of the tops and the support line.

TRIX Index. An oscillator that consists of a one-day ROC calculation of a triple exponentially smoothed moving average of the closing price.

Tunnel. The nickname of the European Joint Float Agreement's total fluctuation band of the European currencies.

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