Three Common Technical Indicators
Technical analysis can be say that it is something more than that of reading the charts. Charts do have a very fine role in this pattern of analysis. The movement of prices is just a portion of story. The technical indicators and studies helps to evaluate the price shifting of the currency. These will definitely show whether the price movement is either strong or reverse. Also they can predict on next price change of the currency.
There are several dozens of various types of technical indicators. Each vendor uses their favorites. However, most traders would agree on that there are three indicators that every business man related to this currency sector should use.
1. Moving average lines
Moving average lines is one of the excellent indicators of whether a market is bearish or bullish or , bearish or not existing.. They shows levels of support or resistance. This piece of information can be given in an instant. As support, the pricevalue is likely to begin moving to higher levels, while at the limit of resistance, the price is tending to fall. The 20-term moving average line is considered up to the standard for currency trading people.
2. Bollinger Bands
The Bollinger Bands are the trading bands which are placed on a change in the price and the moving average line 20. It Shows if a currency is trending and clearly points where there could be a reversed price movement. Bollinger bands are great to show support and resistance and the degree of volatility or the better price change of even a single coin. Support is usually in the lower category of Bollinger band, where as resistance can be observed in the upper Bollinger band.
3. ADX or Average Directional Index
This is an indicator which works well in moving average lines and also in Bollinger Bands. ADX exhibits the strength of the trend. If the trend is really strong, it will continue. And when it is weak, it may translate. The actors have a different strength of the trend in the figures. ADX level, which is less than 10 indicates that currency trading is in a narrow zone, or is not oriented at all. ADX level of over 30 indicates a moderate strength of the trend. Ultimately,when ADX is above 40, it indicates strong trend.
Traders initially may get just attacked by huge number of the technical indicators. But be careful while dealing with each one. From this article of three major indicators you may be provided with a good basis of mapping. Usage of candlesticks along with above indicators provide excellent image of market.