The 5 most popular technical analysis indicators
Successful traders use a variety of technical analys forexbonusrebate methods to cashback forexform their trades. These methods are broadly divided into two categories: fundamental forexrebatesbrokers forex discount brokers technical analysis Fundamental analysis involves the analysis of various economic, political and social factors that may affect the value of a currency, while technical analysis focuses entirely on statistical data to determine price direction Technical analysis is an integral part of forex trading Technical analysis is an integral part of forex trading because it provides a clearer indication of short-term price direction than fundamental analysis Japanese candlestick candlestick charts were invented in the 18th century by a Japanese rice merchant named Munehisa Homma. This first technical analysis tool for trading is said to have enabled Homma to achieve profits on 100 trades in a row, while Western traders were not introduced to the tool until the late 1980s to try to catch up with Hommas record, when the approach was popularized by Steve Nison. Without a doubt, the greatest proof of the validity of the Japanese candlestick chart is the fact that it has been used for over 300 years The Relative Strength Index (RSI) Next is the Relative Strength Index (RSI) RSI is one of the most valuable and reliable indicators in a traders toolbox, developed in 1978 by the godfather of technical analysis, J. Welles Wilder Jr. (the rate at which prices are rising or falling) to determine whether it is experiencing buying or selling pressure. Conversely, the indicator measures whether an asset is overbought or oversold. Traders value the RSI because of its unparalleled ability to gauge price action through momentum movements - take the best of it and apply it to your trading. This makes it easier for traders to identify the price trend of a security, as well as any potential changes in the trend Moving Averages are very intuitive - a simple arithmetic sum of the closing prices of an asset over a period of time, divided by the number of periods, to calculate the forexdiscountbrokers average One of the advantages of Moving Averages is their ability to identify uptrends This can be achieved by comparing moving averages over different time frames - if the short-term moving average is higher than the long-term average, then an uptrend is indicated, and vice versa Moving averages include simple moving averages, exponential moving averages and weighted moving averages Fibonacci retracements Fibonacci retracements are a form of technical analysis that is very controversial and popular It has its roots in Western mathematics and is based on the so-called "golden mean" of 0.618 (also known as Phi), a number derived from the difference between the positive numbers in the Fibonacci sequence Fibonacci retracement involves tracking the distance between the high and low of an asset after Dividing the vertical distance between the two by the key Fibonacci rates of 23.6%, 38.2%, 61.8% and 100% allows traders to determine an assets support and resistance levels. Unlike moving averages or oscillators, Fibonacci retracement levels are completely static and therefore easy to interpret quickly, making them useful in markets that require traders to react and make decisions quickly (such as Forex). Bollinger bands, named after their inventor John Bollinger, are a volatility indicator that shows moving averages plus price bands on either side of them. Bollinger bands are valued for the way they show different levels of volatility, helping traders identify potential trading opportunities when the simple moving average in the center is "squeezed" by an adjacent trading band "Many traders believe that low volatility conditions are better than high volatility periods, however it is important to understand that Bollinger bands cannot be used to predict the direction and magnitude of price movements and therefore should not be used as trading signals Forex EA House (www.eazhijia.com), download free forex indicators, forex trading systems!
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