- Writer: Iain Johnstone
- Printed: October 24, 2011
- Phrase count: 522
Looking for a perfect Forex charting tool? Think again; none exist. However, you can boost your trading success by using a variety of tools together for better insights.
Forex charting typically involves three main types of analysis:
Trend Indicators: These include moving averages (like MACD and DMI).
Oscillators: Common examples are Stochastics, Rate of Change, and Commodity Channel Index.
Sentiment Indicators: These include Put-Call ratios and Commitment of Traders reports.
It’s beneficial to combine these indicators with other analyses, like the Elliott Wave Principle, which can provide valuable insights such as trend direction and potential price targets.
The Elliott Wave method reveals patterns that can predict future movements. Correctly identifying these patterns can significantly improve your buying or selling decisions.
Correctly interpreting your analysis can lead to price movements in your predicted direction. Each wave has unique characteristics that can be evaluated for trading signals.
The MACD is a commonly used tool in charts, represented by a thin line (the difference between two moving averages) along with a sign line (a nine-period average of the MACD). It’s best to look for trends rather than relying solely on line crossings for trading decisions.
For example, observe how the MACD behaves when it approaches the signal line. Divergence could signal a potential trend change, but always confirm with other tools.
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