Below is a summary of the more useful common chart indicators that you can include in your trading toolbox. You may consider testing out the indicators on your own to derive your own method of applying them. This will involve some time as you would need to test the different settings and styles through trial and error. Alternatively, you can also consider using tested systems that uses these indicators effectively.
MACD
MACD are moving averages of other moving averages.
Provide hints on new trend formation early and can also help to spot trend reversals.
MACD lag because it uses so many moving averages.
One way to use MACD is to wait for the fast line to “cross over” or “cross under” the slow line and enter the trade accordingly because it signals a new trend.
Recommended trading system : Black Dog System.
Stochastics
Indicates overbought and oversold conditions.
When the moving average lines are above 80, it means that the market is overbought and forex traders should look to sell the currency pair.
When the moving average lines are below 20, it means that the market is oversold and forex traders should look to buy the currency pair.
Recommended trading system : Forex Trading Made EZ
Relative Strength Index (RSI)
Indicates overbought and oversold conditions.
When RSI is above 70, it means that the market is overbought and forex traders should look to sell the currency pair.
When RSI is below 30, it means that the market is oversold and forex traders should look to buy the currency pair.
Recommended trading system : Black Dog System
Heiken Ashi
Heiken Ashi can help to identify the commencement and strength of a trend from the characteristics of its candles.
Bullish candles: hollow candles with no lower shadows and these indicate a strong uptrend meaning that you should continue with the buy (long) position.
Bearish candles: candles have big bodies and long lower shadows but no upper shadow indicate that you should continue with the sell (short) position.
Recommended trading system : Forex Trading Made EZ
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