4.39 Recap - Indicators

On this one page we give you all the indicators we’ve looked at so far. This is the page to turn to for a quick cure to FXtraderamnesia, a temporary and forgetful condition of the mind!

Bollinger Bands Flash Card

A measure of the market’s volatility.
  • Dynamic support and resistance reflected around the price 

  • Bollinger Bounce-buy at upper band and sell at lower band 

  • Bollinger Squeeze-bands narrowing- trade in the direction of breakout

MACD Flash Card

Good for catching an early trend.
  • Made up of a fast moving average and a slow moving average

  • Crossover of the faster average through the slower average implies a new trend direction

Parabolic SAR Flash Card

Ideal for spotting a trend reversal.
  • Serves well in trending markets  easy to use 

  • Sell when its dots are above the price line 

  • Buy when the dots are below the price line

Stochastic Flash Card

Good for checking out overbought or oversold conditions 
  • Reading above 80 = overbought hence sell 

  • Reading below 20 = oversold hence buy

RSI Flash Card

Identifies overbought or oversold conditions.
  • Reading above 70 = overbought hence sell 

  • Reading below 30 = oversold hence buy

ADX Flash Card

Tells you the strength of a price trend.
  • Reading above 40 = strong trend 

  • Reading below 20 = weak trend

CCI Flash Card

 Shows whether the market is overbought or oversold.
  • Reading above +100 = overbought 

  • Reading below -100 = oversold 

  • Reading above +200 = extremely overbought 

  • Reading below -200 = extremely oversold

Ichimoku Kinko Hyo Flash Card

The origin of Ichimoku cloud being Japan, the Japanese name of it is Ichimoku Kinko Hyo, which means one glance. And yes, this powerful indicator gives you a lot of insight in just one glance.
  • It indicates 4 levels of dynamic support and resistances. The first level is Tenkan line, second is Kijun line and depending on whether the price-action is above or below the cloud, the upper edge and the lower edge of the cloud become third and fourth levels respectively. If price action is above these levels then these tend to act as support and if the price-action is below then these would act as resistance.

  • This indicator also tells you about the momentum of the trend. A very strong uptrend is indicated if the case price-action is continuously above the first level of support i.e. the Tenkan line. Similarly a very strong downtrend is indicated if the price-action stays below the first level of resistance i.e. the Tenkan line.

  • The crossover signals are generated by the crossover of the faster Tenkan line and slower Kijun line. unlike other indicators these signals can also be classified as strong, medium and weak signals. A strong bullish signal is when the price-action is above the cloud and Tenkan line crosses the Kijun line upwards. Similarly a strong bearish signal is when the price is below the cloud and Tenkan line moves below the Kijun line. 




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