Simple Moving Average (SMA) is one of the easiest indicators to use as Technical Analysis for Forex trading. SMA indicates the average price (closing/opening) of a given time period, where each of the chosen periods carries the same weight for the average.
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The Relative Strength Index (RSI) is one of the most popular Technical Indicators in oscillator charting methods. RSI is normally used to compare the currency strength and to predict currency price movements.
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Parabolic SAR is a technical analysis method to predict entry and exit points in Forex Market. It’s widely used in Forex trading market because of its accuracy during trending period. Parabolic SAR is a time/price system. It was first introduced by J.Welles Wilder in his acclaimed book “New Concepts in Technical Trading Systems” (1978). SAR [...]
MACD uses exponential moving averages (EMA), which are lagging indicators, to include some trend-following characteristics. These lagging indicators are turned into a momentum oscillator by subtracting the longer period of EMA from the shorter period of EMA. Translating the words into mathematics, this is what a MACD calculation looks like:
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Fibonacci Retracements:
Fibonacci ratios are actually a series of numbers that are used to help describe a natural progression of proportions. These numbers were discovered by the mathematician Leonard Fibonacci. The main idea behind Fibonacci ratios is to use them as indicator for resistance and support levels. They can be used to indicate the levels where [...]
Technical Indicators in Forex trading
A technical indicator is a series of data points that are derived by applying a formula to the price data of a security.
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Quoting Foreign Currency
Currencies are always quoted in pairs. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed.
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In order for a Forex trader to make profit from trading in the market, he must be able to predict the movements of the prices. To do this, he can resort to using “Fundamental Analysis” or “Technical Analysis” to help him formulate his prediction about the Forex price movements.
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Unlike stocks where we can evaluate its intrinsic value by looking at the company’s cash flow and assets; evaluating the value of a currency involved more guesstimation job.
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What is Technical Analysis?
The Relevancy of Technical Analysis in Forex Trading
The main objective behind technical analysis is to identify trends when they initially develop. This will permit the trader to capitalize in on the trend until it switches direction. The reason why technical analysis plays such an important part in the Forex market is [...]
