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
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GBPUSD
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USDJPY
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05 Februari |
Day chart: the pair had a raise after breaking of upper Bollinger envelope, that’s why both scenarios are equally (black/red arrows). H4: the pair didn’t test upper Bollinger band (1.1246). And the price is expected to move downwards to middle Bollinger band (1.1006). H1: the price is going toward
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Day chart: as we can see, upper Bollinger band is a strong resistance level, so we can wait for pull back to middle Bollinger band (1.4372) H4: there is a local support at 1.45 (middle Bollinger band), but the price may go towards 1.4322- 1.4372 zone. H1: ADX is active and low envelope is under at
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Day chart: so, the price has achieved bullish O&U, so the main scenario is prive moving to upper Bollinger band (120.51), and then even more to 123.00. H4: local resistance is 118.74 (middle Bollinger band). H1: there is a bullish oscillator convergence here . Local support is located at 116.52, r
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