Types of forex technical analysis indicators
Broadly speaking there are 3 types of indicators commonly used in technical analysis, namely:
1. Price Momentum Indicator (Oscillator)
This type of indicator is used to identify an oversold or overbought situation. The momentum of the indicator is also used to see if a trend will continue or weaken further.
Example indicators:
- Stochastic Oscillator
- Relative Strength Index)
- CommodityChannel Index (CCI)
2. Trend Following Indicator.
This indicator is used to identify the beginning and end of a trend or when a trend will change so it can be known when the best time to open and close positions.
Example indicators:
- Moving Average
- Moving Average Convergence - Divergence (MACD)
- Directional Movements Index (DMI)
- Parabolic SAR
3. Volatility Indicator
This indicator is used to see market forces viewed from price fluctuations within a given period of time. The market is said to have a high volatility if price movements go up and down sharply or very fluctuating where there is a big price difference between the highest and lowest prices.
Example indicators: - Bollinger Bands
Pros and Cons of technical analysis
The advantages of technical analysis are:
-Focus on price
Since the purpose we are analyzing is to predict future price movements, it makes sense to focus on price movements, both past prices and current prices. So we are not troubled by what news is circulating.
-There are Entry points and Exit points
With technical analysis we can determine when the time is right for the transaction (entry point) and when it is time to exit the market (exit point) clearly. So we do not waste time for ineffective transactions.
-Easy
With the history of data on the graph we can mebaca what is happening with market.sehingga so see an opportunity we can directly transact.
Weaknesses Technical analysis include:
-Data displayed very late
The data generated by the Indicators in the technical analysis is using the previous data, so that when the data from the indicator says the price will rise, in fact the price itself has gone up.
-No Objective
A data displayed on a technical analysis chart can cause different interpretations by each trader.
-Have an inflated price level
In technical analysis known as the level of support and resistance, namely the critical level that can be the starting point behind the price direction. But in reality this level is always changing, sometimes higher or lower. This makes many traders deceived.
By looking at the advantages and disadvantages, you should be able to take advantage of the advantages and try to anticipate the weakness.
1. Price Momentum Indicator (Oscillator)
This type of indicator is used to identify an oversold or overbought situation. The momentum of the indicator is also used to see if a trend will continue or weaken further.
Example indicators:
- Stochastic Oscillator
- Relative Strength Index)
- CommodityChannel Index (CCI)
2. Trend Following Indicator.
This indicator is used to identify the beginning and end of a trend or when a trend will change so it can be known when the best time to open and close positions.
Example indicators:
- Moving Average
- Moving Average Convergence - Divergence (MACD)
- Directional Movements Index (DMI)
- Parabolic SAR
3. Volatility Indicator
This indicator is used to see market forces viewed from price fluctuations within a given period of time. The market is said to have a high volatility if price movements go up and down sharply or very fluctuating where there is a big price difference between the highest and lowest prices.
Example indicators: - Bollinger Bands
Pros and Cons of technical analysis
The advantages of technical analysis are:
-Focus on price
Since the purpose we are analyzing is to predict future price movements, it makes sense to focus on price movements, both past prices and current prices. So we are not troubled by what news is circulating.
-There are Entry points and Exit points
With technical analysis we can determine when the time is right for the transaction (entry point) and when it is time to exit the market (exit point) clearly. So we do not waste time for ineffective transactions.
-Easy
With the history of data on the graph we can mebaca what is happening with market.sehingga so see an opportunity we can directly transact.
Weaknesses Technical analysis include:
-Data displayed very late
The data generated by the Indicators in the technical analysis is using the previous data, so that when the data from the indicator says the price will rise, in fact the price itself has gone up.
-No Objective
A data displayed on a technical analysis chart can cause different interpretations by each trader.
-Have an inflated price level
In technical analysis known as the level of support and resistance, namely the critical level that can be the starting point behind the price direction. But in reality this level is always changing, sometimes higher or lower. This makes many traders deceived.
By looking at the advantages and disadvantages, you should be able to take advantage of the advantages and try to anticipate the weakness.
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