Forex Chart Indicators
Using a Forex chart to analyze the market can help you see what is going on in real-time. Many traders use indicators to help make analyzing the chart easier. Here are some of the most popular indicators you'll find.
Bollinger bands are one of the most commonly used Forex indicators on the Metatrader platform. Bollinger bands are an indicator that essentially puts a line on each side of the price on a Forex chart. When the lines are close together, it indicates that the market is quiet and not much action is going on. When the bands spread out, it means there is more trading going on.
Price tends to bounce back and forth between the upper and lower limits of the Bollinger bands. When you see the price touch the bottom band, there is a high likelihood that it will bounce back up again.
Moving Average Convergence Divergence (MACD)
The moving average convergence divergence or MACD is another popular one that you'll find on your trading platform. With this indicator, you can use it to figure out when a trend is about to start. This is an indicator that makes two lines on the bottom of the screen under the price line.
When a trend is about to form, one line will cross over the other. Depending on which direction the line is moving, it could mean that a trend is about to occur.
The Parabolic SAR sounds like a deadly disease, but in reality, it is a fantastic indicator that you can use to trade the Forex market. Many traders who use technical analysis tools can tell you when a trend is about to start. However, just as important as telling you when it will start, you need to be able to figure out when it will end. If you stay in the trade too long, you can lose everything that you had previously won. This is where the Parabolic SAR comes into play.
It shows up on your chart like a series of dots that go above or below the price line. When the dots are above the line, this means that the trend is moving down. Then if the line switches and goes below the line, it can tell you that the trend is reversing and going the other way.
For long-term trend following systems, this can make a good place to put your stop loss as well. It gives you enough breathing room to catch the trend without giving up too much.
The stochastic is another indicator that you can use to figure out when to close out a position. This indicator uses a little chart on the bottom of your screen. If the moving line goes up above 80, this tells you that the currency pair is currently overbought. If the line goes below the 20, this tells you that the currency pair is underbought.
Relative Strength Index or RSI is an indicator that is also designed to help you figure out when a currency pair is overbought or sold. It can also help you figure out the trend. This one works in much the same way as the Stochastic.
Return From Chart Indicators to Forex Charts
Return From Forex Charts to Forex Trading