Analytical indicators

Forex indicators represent a number of analytical methods applied to the trading system. Its rules are called signals.

Mathematical approximation, also known as filtration is used in analytical methods. The main object of the technical analysis is certainly the share price figures. The direction, the strength, and the strength of the market are determined through technical analysis indicator.

Technical analysis indicators are divided into specific and non-specific. Equation and algorithm are often used as the forms of quantifying technical analysis indicators. Other indicators, like head and shoulders, trend lines, support and resistance appear to be patterns.

Certain functions represented by an indicator are taken from certain periods at the set-time window. There are six categories that indicators are divided into:

Trend indicators

Trend describes the direction in which the price moves during a period of time. Trend can move up, down and sideways (e.g. trend lines, moving averages).

Strength indicators

The data of market opinion intensity is described by market strength. It is carried out through analyzing market participants' positions (e.g. volume).

Volatility indicators

This indicator shows daily price movements despite their trend direction. Therefore, price changes are dependent on the volatility trend changes (e.g. Bollinger Bands).

Cycle indicators

It indicates the cyclical fluctuations of the market caused by some unique or repeated events like elections or seasons (e.g. Elliott Wave).

Support/resistance indicators

This indicator shows price showings at which market makes a repeated rise or fall and then returns to normal conditions (e.g. trend lines).

Momentum indicators

The speed of price fluctuations during a certain period is described by the momentum. The beginning of the trend gives higher momentum values whether the end of the trend gives lower ones. An extreme price figures along with low momentum shows the end of the trend. Rising momentum and stable prices show possible inversion of the price direction (e.g. Stochastic, MACD, RSI).

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