In this article, we are going to discuss the most popular technical indicators used when trading Forex to achieve a reasonable success rate. We are going to list them one by one according to their use starting with the Fibonacci levels.
Fibonacci sequence is a numeric sequence the can be used to present various support or resistance levels by applying it on price charts. To explain how to apply the Fibonacci indicator, basically we need to find the lowest and the highest points of a move within the desired period we want to measure. This can be applied on the price itself, time zones or channels. Below is a demonstration to this indicator.
This indicator is considered second of most used popular technical indicators especially among relatively experienced traders. This indicator consists from the following:
MACD line — The difference between the Moving Average of 12 and 26 periods. (The blue line)
The signal line — It is simply the 9 periods moving average which is plotted on the MACD display itself. (The red line)
The Histogram — It is the difference between the MACD line and the signal line and it appears as a “bar chart” included in the background of the MACD display and it look like parallel lines. The actual height of the bar is the difference between the MACD and signal line itself.
The Moving Average Indicator is one of the oldest and most popular technical analysis tools. The Moving Average is the average price of a financial instrument over a given period of time. It is demonstrated on the price chart and act as support/ resistance levels as well as overbought and over sold situations.
One of the most used popular technical indicators. The Relative Strength Index (RSI) casts the strength ratio of a financial instrument’s trend compared to other periods, which is usually a value between 30 and 70. As its name implies, it shows the strength of a price chart relatively to other periods, which serves as a good indication to enter/ exit trading positions.
Commodity Channel Index (CCI) shows the relationship between the price of a particular financial instrument, the moving average of this price and the level of price deviation from this average. It is excellent in pointing out over bought and over sold situations as it approach the lower and higher level of the indicator.
The Stochastic Oscillator is a momentum indicator that attempts to predict price turning points by comparing the closing price of a financial instrument to its high- low price range. In the case of an uptrend, prices tend to make higher highs, and the closing price usually tends to be in the upper end of that time period’s trading range. In the case of an downtrend, prices tend to make lower lows, and the closing price usually tends to be in the lower end of that time period’s trading range.