What are the Best Technical

Trading Indicators for Forex?

LEADING INDICATORS

• Leading indicators are indicators, which manage to give you a preliminary signal.

• This means, that a leading indicator could put you in the market in advance of the potential move

• Stochastic, RSI, CCI

LAGGING INDICATORS

• With lagging indicators the signal comes after an event and it acts like a confirmation, rather than a forecast.

• ADX, MACD, Bollinger Bands, Parabolic SAR

STOCHASTIC INDICATOR

• The Stochastics indicator consists of two lines which move together and interact with each other at some point.

• In addition the indicator has an upper and lower zone. The upper area is the overbought area and the lower area is the oversold area.

Stochastic Indicator Signals

RELATIVE STRENGTH INDEX (RSI)

• The RSI has only one line, which enters an upper and a lower area on the indicator. These are the overbought and the oversold areas.

• When the RSI line enters the upper area usually above the 70 reading, we get an overbought signal.

• When the RSI line enters the lower area usually below 30, we get an oversold signal.

RSI Indicator Signals

ADX (AVERAGE DIRECTIONAL INDEX)

• The Average Directional Index (ADX) is a technical indicator used for trend analysis.

• It shows how strong and reliable a trend is. The ADX indicator does not show trend direction. It only provides hints as the strength of a trend.

As the ADX indicator rises, we

except to see strong price trends

BOLLINGER BANDS

• Bollinger Bands are a technical indicator based on price volatility. It consists of an upper and a lower band, and a Simple Moving Average in the middle.

• The upper and the lower bands are used as support and resistance levels and the SMA is often used as a position trigger.

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MACD• The MACD is an indicator that

takes two moving averages of

two moving averages of the

price, then it smoothes them by

two other moving averages.

MACD Crossover Signals

PARABOLIC SAR (STOP AND REVERSAL)

• The Parabolic SAR indicator was created by Wells Wilder, who also created the RSI indicator.

• One Parabolic SAR rule that can be used is, buy when there are three dots below the candles and sell when there are three dots above the candles.

Parabolic SAR Indicator

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