There are only two main methods of predicting the price movements on Forex: fundamental and technical analysis. While the first one deals with financial news and events, technical analysis takes into account only price movements and certain pattern of that movements. It implies that patterns repeat, if they were formed once. So, you can guess how the quotes will move in future after analyzing the history charts. It may sound uneasy, but if you dive deeper, you’ll notice that this type of analysis is based mainly of the market trends and the supply and demand levels.
The team of JustForex broker is going to tell you more about technical analysis. This material will be very much useful for novices, so read it carefully and remember that names!
Here are the most well-known and efficient indicators for performing high-quality technical analysis.
1) The Moving Average (MA)
This indicator can help you to distinguish a real pattern from another market noise. This one is well-known and widely-used. It is based on the currency prices from the past and can be called a trend indicator. Simple moving average (SMA) and Exponential moving average (EMA) are the most used variants of this indicator. The first one gives the information on the historical prices, the second one works with the recent ones. Nevertheless, both types will give you a chance to determine the current trend direction and the price levels.
This one can be effective momentum indicator/oscillator. It is based on moving averages as well and combines the opportunities of the trend following and momentum indicators. So, it will suit both trend traders and day-traders.
3) Stochastic Oscillator
This indicator was developed by George Lane in 1950s and it still remains popular among traders. This price pulse indicator works with the market speed and can determine the position of closing prices. It calculates in between high and low for a few days. For instance, if you use 14-day Stohastic, it will measure such price position for the last two weeks.
It was described by Peter Kaufman in 1987. Later it was spread among traders thanks to John Bollinger, it’s author. Visually it looks like two lines gathered in an envelope. This lines are alike to the support and resistance lines. Still, the range of this indicator depends on the market volatility, it is the uniqueness of this indicator.
It was invented in 1930s, by the analyst Sanjin Ishimoku (originally named as Hosoda) for predicting the price movement of Nikkei stock index for mid- and long-term trading. This indicator helps in determining the trend and the s&r levels. The Ichimoku Kinko Hyo trading system includes 5 lines, 4 of which are alike to moving averages, and the last one is similar to the Momentum oscillator.
You can use all of these indicators for performing your technical analysis, and just a few ones on different timeframes.
Authors bio: A writer and a PR manager of JustForex (https://justforex.com)