What are the Forex Technical Indicators ?
A technical indicator is a series of points used to predict the movement of currency during a financial product or other. You will find below the technical indicators the most famous and learn how to build your own technical indicators. * The relative strength index (RSI)
* The Stochastic Oscillator
* Moving Average Convergence Divergence (MACD) [Convergence and Divergence * Moving Average]
* Number theory
* Waves
* The gaps or ditches
* Trends
* Chart formations
The relative strength index (RSI) :
This index is an indicator of popular scholarship. The RSI measures the ratio of upward trends in relation to those down and normalizes the calculation so that the index is a number between 1 and 100. If the RSI is 70 or higher then the instrument is seen as overbought (a situation in which prices have risen well above market expectations). An RSI less than or equal to 30 indicates an instrument in an oversold position (a situation in which prices have fallen much more than the market was anticipated).
The Stochastic Oscillator :
It is used to indicate the conditions of overbought / oversold on a scale from 0 to 100%. This indicator is based on the observation that a strong upward trend, closing prices tend to concentrate on the highest part of the extended period. Conversely, when prices are strong down trend, closing prices tend to concentrate on the lowest part of the extended period.
Stochastic calculations produce two lines,% K and% D that are used to indicate areas of overbought / oversold on a graph. The discrepancy between the stochastic lines and the share price of the underlying instrument gives a powerful trading signal.
Moving Average Convergence Divergence (MACD):
This indicator consists of two lines of momentum. The MACD line is the difference between two exponential moving averages and the signal line is an exponential moving average of the difference. If the line and the MACD signal line cross, this is considered a sign of change in trend is very likely.
Number theory :
The Fibonacci sequence:
The Fibonacci sequence (1,1,2,3,5,8,13,21,34 … ..) is constructed by adding two numbers to arrive at a third. The proportion of any number compared to the next is 62%, which is a popular figure fallback Fibonacci. The inverse of 62%, which is 38%, is also used as a sales decline of Fibonacci (used with the theory of Elliott Waves, see below)
Gann Angles:
WD Gann was a trader in stock values and who worked in the 50s and would have made more than 50 billion dollars on the market. He made his fortune using methods he developed as tools for trading based on relationships between price movement and time, known as price-time equivalents. There is no simple explanation for Gann methods, but, roughly speaking, he used angles in charts to identify areas of support and resistance and predict the times of future changes in trends. He also used lines on the graphs to identify areas of support and resistance.
Waves :
The theory of Elliott wave:
The theory of Elliott Wave is an approach to market analysis which is based on the repetition of patterns of waves and the Fibonacci sequence. An ideal pattern of Elliott wave consists of five waves rising waves followed by three declining.
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The gaps or ditches :
Gaps are spaces left on the bar chart where no trading has taken place. An up-gap or gap up, formed when the lowest price for a trading day is higher than the highest price the previous day.
A down-gap or gap down, is formed when the highest price for a day is lower than the lowest price the previous day. An up-gap is usually a sign of market strength, while a down-gap is a sign of market weakness.
A gap or fracture gap is a gap of prices which is when an important price pattern is completed. This signals the beginning of a significant price movement.
A gap or gap exhaust is a price gap that usually occurs around the middle of an important market trend. For this reason, it is also called a measuring gap.
A gap or gap of breathlessness is a price gap that occurs at the end of an important trend and signals that the trend is coming to an end.
Trends :
A trend refers to the direction of prices. The peaks and troughs of the upward trends are on the rise, and peak and trough of decline are the downward trends that define the slope of the trend. The breaking of a trend line usually indicates a reversal. A change in trade is characterized by horizontal peaks and troughs.
Moving averages are used to harmonize pricing information in order to confirm trends and support levels and resistance. They are always useful in determining a marketing strategy specifically for distributors or future markets with a strong upward or downward.
For simple moving average, the price is averaged over a number of days. Day after day, the oldest price is removed and replaced by the price of current day – and the average changes daily. For exponential moving averages or weighted, using the same technique, but lays the figures – the weight the lowest price for the oldest and highest coefficient for the price later.
Chart formations :
Examples of graphic formats: (triangle, rectangle, head-shoulder-shoulder)
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