Reliable Forex Analysis Using Forex Indicators

Sunday, January 30, 2011




Forex is a highly volatile market where price will move up and down every single second. Because of the volatile nature of forex, traders have to be very precise and accurate in their forex analysis in order to profit from it. Therefore being able to have a reliable forex analysis can be a great help to your trading account.





In order to do a good forex analysis, you definitely requires the use of several forex indicators that can help you to decide on your entry and exit position. If you have been reading up books or have been attending seminars, you are already exposed to the various commonly used forex indicators that most traders use for their forex analysis and you would have seen how they managed to use them successfully.





However, you need to know that those examples that are used in the books and courses are usually the ideal situation demonstrated by the forex indicators. In reality, the market movement will not be as ideal as those pictures in the books or courses. This is something that made me scratch my head when I first started trading currency after reading some forex books.





The most reliable forex indicators that I have used is the 200 EMA, it is in fact voted as the most realiable forex indicators in a currency trading magazine. You can use the 200 EMA as a gauge for your forex analysis. If your price move above the 200 EMA, it most likely means that the trend is shifting upward and vice versa. Another way to know the trend lies in the steepness of the 200 EMA, the steeper it is, the stronger the trend.





Once you have identified the trend, you can make use of a type of forex indicators called oscillator like the stochastic or RSI to help you check whether the market is oversold or overbought. This can make your forex analysis more reliable as you can check for possibility of reversal. If the currency pair is oversold and the price is above the 200 EMA, there is a good chance that the price is going to move up after the retracement and the opposite is true as well.





There are so many different way you can do your forex analysis using different forex indicators. The most important is for you to come up with a trading plan and then pick different indicators that can fit into your trading plan so that you can profit from it.


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