The use of Fibonacci retracement and extension levels could also be combined with technical indicators. For instance, one can enter at market when stochastic has already made a turn from the overbought or oversold area and price is showing signs of bouncing off a Fibonacci level. Similarly, one can decide to exit a trade at … Continue reading Using the Fibonacci tool with candlesticks
This section covers the basic technical indicators used in forex trading, the most common of which is the moving average. As the name suggests, this kind of technical indicator measures the average closing price of the currency pair for a specified period. For example, using the moving average (20) on an hourly chart takes the … Continue reading How Moving Averages Work
Technical indicators are grouped into two main classifications: oscillators or leading indicators and momentum or lagging indicators. Moving averages, as discussed in the previous section, typically fall under the category of lagging indicators but the parameters can be modified or shifted to allow it to act as a leading indicator. As the name suggests, leading … Continue reading Types of Technical Indicators
When it comes to using leading indicators, a good way of remembering how they work is to understand that they “oscillate” between two points, hence the name oscillator. This means that they bounce back and forth from point A to point B, which is another way of saying that what goes around comes around. When … Continue reading Using Oscillators or Leading Indicators
As opposed to leading indicators which generate early trade signals, momentum or lagging indicators give confirmation signals when the trend has already found directional momentum. Because of that, lagging indicators are also known as trend-following indicators. One of the most basic examples of lagging indicators is the moving average crossover system. This can employ either … Continue reading Using Momentum or Lagging Indicators
