If you’ve just learned technical analysis, you may be overwhelmed by all the indicators you need to base your predictions on. You may not be able to use all the indicators and be able to decide in a timely manner, so we will list the top 5 technical indicators used by experts in the Forex market.
If you are a beginner trader, you may want to start with the simplest indicator. The moving average, while simple, is one of the preferred technical indicators for experts. With the moving average, you compare the averages of the charts in two different ranges. For example, you can compare a 7-day average and a 30-day average. Look at how the two averages intersect. You can predict a bearish market if the crossover comes from the top down, and you can predict a sharp market if the crossover comes down.
This technical indicator believes that the market value can be increased or decreased according to two standard deviations. Each standard deviation is drawn on both sides of the moving average price graph. So basically, Bollinger Bands are used to measure whether the price is considered high or low depending on the price history.
Relative Strength Index (RSI)
The relative strength index, or RSI, is the relative strength of the security price compared to past prices of the same value. RSI is used to determine whether a security is buying too much or not selling. Usually within 14 days, you will see a downward and sharp change in prices. You need to divide the sum of the labor fractures by the sum of the lower ones. The answer is an index from 0 to 100. If the number is above 70, the security is excessive (low). Also, if the number is below 30, the security is excessive (bullish).
A stochastic indicator is a good tool to know if the market is strong or weak. This technical indicator shows that if the price rises on the trading day, it is likely to end near the maximum price per day. Therefore, if the price falls on the trading day, it is likely to end near the minimum daily price. This indicator is used as a time tool and can show changes in the trend based on your investment movements. The stochastic indicator is best used in conjunction with RSI.
Average Convergence Difference (MACD)
MACD is a momentum meter that can be calculated by finding the difference between two exponential moving averages. The MACD is following the trends closely. The MACD is different from the moving average, in that with the exponential moving average (EMA), it is given much more weight in the final prices than the rest of the prices represented in the chart.
If you look ahead, you will find many other helpful indicators. However, the ones we have listed here have been the ones that have been tried and tested by experts. By using or combining any of these technical indicators, you can zero in on the best trading move.
You can also find Forex technical indicators used by experienced traders on the Technical Analysis Tips website.