Presented method is the method of technical analysis, which statistics of accuracy is within the range of 60-70%. It is based on three key indicators (Bollinger bands, ADX and RSI) as well as on price levels and price action signals. Analyst Alexey Panasenko is an author of the method.
Forex technical analysis helps to answer the questions: How to interpret Forex rates? Buy? Sell? Close a trade? Take profit or let it run for some more time? Will it face reversal or go trhough correction? Accept a loss and “flip over” or wait for some more time? Finally, how to define Forex trend?” All these questions drive a trader (mainly beginning) crazy, if he does not know the answer. By the way, who will dare to claim to know the answer? Forex exchange rates are cruel towards one's self-confidence and arrogant manner.
Nevertheless, it is subject to regularities and daily techical analysis forex. There are plenty of strategies on Forex trend lines. We are not so much interested with the direction of fx rate along major lines (this is interesting too, though) as with the Potential of the Forex trend. The main purpose of our Forex technical analysis report named "Potential of Trend" is to find if current price goes through correction either we face a trend.
Example of Forex technical analysis
For example, we've opened a trade for sales. Everything is fine. Suddenly, the price reverses (which is usual). And you start to think about the questions described above. If price just goes through correction - never mind. But what if it means what tendency has changed? Because of it you may miss either short receive your profit. Or just burn a few million of neurons. One of standard indicators - ADX - handles this issue perfectly. And with the help of this very indicator we will determine current state of the trend and its potential. We'll omit description of the indicator per se - doing that on your own is simple. From three curves used in this indicator, we will be interested in just one line - ADX. Its properties are simple: trend has its best potential, if ADX line grows from bottom to top. In case of reversal from top to bottom, ADX tells about correction. The signal gets stronger, when line crosses extreme points. Direction of movement will be defined by us with the help of RSI oscillator. Bollinger bands and its major levels will tell us about target moves. Let's turn to the example:
We'll choose any four conditional prices of an active status of price and will check, how indicators behaved before this growth. It is clear that the bottom one (ADX) started to grow, RSI prompted about the direction correctly. That is the method we will use for our task. Bollinger bands are another method we will apply to search for acceptable entry and exit points. One of their properties is movement of price within upper and bottom bands and bottom moving nabd. All that will help us to estimate trend and forecast market events for our instruments.
2016 |
EURUSD
|
GBPUSD
|
USDJPY
|
23 September |
Daily chart: nothing has changed: euro is still within Bollinger envelopes (1.1125-1.1285). ADX is very passive, so basically the price will fluctuate around the middle band (1.1207) Н4: the price has broke through the upper Bollinger envelope, so the basic expectation is a surge after a seconda
|
Daily chart: yesterday, after the inside bar from the lower Bollinger band the pair has predictably moved up. But there are still very weak ADX parameters, therefore, the movement will be multi-directional. Н4: ADX in the active trend area for benefit of buyers. If northern scenario is implemente
|
Daily chart: as we expected, the price has bounce off the lower Bollinger band (100.26) upward. ADX is rising, so bulls have a chance to consolidate their success, even more so that the space for movement up to 104.00 (the upper Bollinger band) is open. Н4: Here, in turn, there is very weak ADX,
|
22 September | | | |
21 September | | | |
20 September | | | |
19 September | | | |