Technical Analysis: Technical Indicators (Do You Need Them?)
Charts always have a story to tell. However, from time to time those charts may be speaking a language you do not understand and you may need some help from an interpreter. Technical indicators are interpreters of Forex market. *Some traders trade Naked Charts, too each their own!!!
Technical indicators are based on mathematical equations that produce a value that is then plotted on your chart. For example, a moving average calculates the average price of a currency pair in the past and plots a point on your chart.
Technical indicators are divided into the following three categories:
Trending Indicators:Trending indicators, as their name suggests, identify and follow the trend of a currency pair.
Moving Average(s)- Moving averages are the most basic trending indicator.
Bollinger Bands- Shows what direction a currency pair is going but also how volatile the price movement of the currency pair is.
Oscillating Indicators:Oscillating indicators, as their name suggests, are indicators that move back and forth as currency pairs rise and fall.
CCI- show you how bullish or bearish traders are toward a currency pair and how dramatic those sentiments are
MACD- show you when trading momentum changes from being bullish to bearish and from being bearish to bullish.
Slow Stochastic- show you when investor sentiment changes from being bullish to bearish and from being bearish to bullish.
RSI-is a momentum indicator used in technical analysis that measures the magnitude of recent price changes.
Volume Indicators: Since currencies are traded on the inter-bank market and not on a central exchange, volume data for currency transactions is not available. Without volume data, you cannot construct volume indicators. Therefore, we do not use volume indicators in Forex trading.
Technical indicators are based on mathematical equations that produce a value that is then plotted on your chart. For example, a moving average calculates the average price of a currency pair in the past and plots a point on your chart.
Technical indicators are divided into the following three categories:
Trending Indicators:Trending indicators, as their name suggests, identify and follow the trend of a currency pair.
Moving Average(s)- Moving averages are the most basic trending indicator.
Bollinger Bands- Shows what direction a currency pair is going but also how volatile the price movement of the currency pair is.
Oscillating Indicators:Oscillating indicators, as their name suggests, are indicators that move back and forth as currency pairs rise and fall.
CCI- show you how bullish or bearish traders are toward a currency pair and how dramatic those sentiments are
MACD- show you when trading momentum changes from being bullish to bearish and from being bearish to bullish.
Slow Stochastic- show you when investor sentiment changes from being bullish to bearish and from being bearish to bullish.
RSI-is a momentum indicator used in technical analysis that measures the magnitude of recent price changes.
Volume Indicators: Since currencies are traded on the inter-bank market and not on a central exchange, volume data for currency transactions is not available. Without volume data, you cannot construct volume indicators. Therefore, we do not use volume indicators in Forex trading.