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Posts tagged ‘Fibonacci levels’

MACD- another useful indicator for Forex Trading Strategies and Chart Fx

MACD OSCILLATOR

MACD (stands for Moving Average Convergence Divergence) is a technical analysis indicator which uses Moving Averages calculated from the closing price or other historical data to estimate the direction and duration of a trend. MACD is nothing more than a difference between exponential moving averages (EMA) shown as a line chart. It can be very useful when used together with signals and indicators mentioned in the previous blog entry (MA, Trend lines, Swings, Fibonacci levels and Pivot points) to minimize the risk of your forex trading strategies calculated from chart fx analysis,

 

Chart Fx MACD MACD histogram MACD  another useful indicator for Forex Trading Strategies and Chart Fx
Chart Fx MACD MACD histogram

MACD HISTOGRAM

MACD histogram is the divergence between the MACD and the signal line presented as a specific chart (MACD histogram = MACD line– Signal line). It is especially valuable tool when used with forex trading strategies. It  is easier to finding support and resistance with this additional indicator. Minor highs and lows, Fibonacci levels (as well as pivot points) together with MACD histogram can be a good tool for predicting a trend and momentum (the tendency for falling prices to fall even more or opposite, rising prices keep on rising). It’s intuitive, commonly used by many traders for both entry and exit.  When the prices are bullish, the histogram grows bigger as the prices start to rise faster, and contracts as price movement begins to slow down. The same principle works in reverse when prices are bearish. So that it can be used very well for spotting trend reversals. MACD histogram works the best for long-term investments.

Here you can see how the MACD histogram corresponds to GBP/USD Japanese candlestick chart fx

MACD histogram GBP USD Japanese candlestick chart fx MACD  another useful indicator for Forex Trading Strategies and Chart Fx
MACD histogram GBP USD Japanese candlestick chart fx

The bar chart, MACD and MACD histogram:

CHART FX MACD and MACD Histogram MACD  another useful indicator for Forex Trading Strategies and Chart Fx
CHART FX MACD and MACD Histogram

Here you can see how the MACD histogram corresponds to GBP/USD Japanese candlestick chart. As you see when the price doesn’t change its value the MACD histogram is close to the zero level. Rising or falling (on the histogram) towards the zero line can be used as an early signal for closing position.

 

The most successful tools used in chart fx forex trading strategies are old. MACD is a relatively new invention. It was founded in 1970s by Gerard Appel. The histogram was added 16 years later, so as you see it’s simple math calculations supported with forex trading strategies intuition. Everyone can learn the skills to become a successful forex trader, who earns thousands of dollars every week. This could be easily discussed at school during the Math classes, but who cares?

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BEST FOREX TRADING STRATEGIES: Most useful tools in technical analysis

The most successful forex trading strategies use the most reliable patterns. A lot of traders act on their signals. In some ways what we are doing is exploiting self-fulfilling prophecy. What we need to do is, see what other players are seeing and learn to read these patterns in order to make the next step. Make sure you work with patterns that are easy to spot. Just remember, the more traders that can see the pattern, the more predictive that pattern will be. Check out chart fx techniques.

 

1st Forex Trading Strategy Tool:

Moving Averages

It’s a filter used in economics which shows the average value of data over a set period of time. In general, MV are used to measure momentum and find possible support and resistance lines. This indicator helps to estimate the direction of a trend, to smooth out the chart and to reduce any noise which could affect the proper interpretation.

2nd Forex Trading Strategy Tool

Trend lines- support and resistance

In technical analysis it’s a line that can be drawn between at least two price points. It is used to predict when to entry and exit an investment. Support line is the one in which the price is the most likely to bounce of its bearish level (decreasing). On the contrary, resistance line is the line which the price “finds” when is bullish (going up). The line shows the level which the price most probably won’t break through.

SupportResistanceTrendLineChartFx BEST FOREX TRADING STRATEGIES: Most useful tools in technical analysis
CHART FX: Support and Resistance Trend Line

3rd Forex Trading Strategy Tool

Swings minor highs and lows of the chart

A swing high is a turning point in the chart history. The price reaches the top and falls down. Swing low is the opposite. The price goes down, stops and goes up. To fully understand the mechanism, please look on the charts below:

Swing highs

 

chart fx swing high BEST FOREX TRADING STRATEGIES: Most useful tools in technical analysis
chart fx swing high

Swing lows:

 

chart fx swing low BEST FOREX TRADING STRATEGIES: Most useful tools in technical analysis
chart fx swing low

4th Forex Trading Strategy Tool

Fibonacci levels

These indicators are used to determine the level of support and resistance. Key Fibonacci ratios are 0%, 23.6%, 38.2%, 61.8%, and 100%. Once the Fibonacci levels are estimated identifying the trend lines are easier.

chart fx fibonacci levels BEST FOREX TRADING STRATEGIES: Most useful tools in technical analysis
chart fx fibonacci levels

 

5th Forex Trading Strategy Tool

Pivot points

These indicators have the same purpose like Fibonacci levels. Pivot points are used to estimate support and resistance levels. PP are calculated as an average of High, Low and Close prices.

chart fx pivot points BEST FOREX TRADING STRATEGIES: Most useful tools in technical analysis
chart fx pivot points
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