Forex market indicators - in the context of technical analysis an indicator is a mathematical calculation based on the price and/or volume of securities. The result is used to predict future prices. Common indicators of technical analysis are MACD (convergence and divergence indicator moving Averages) and relative Strength Index (RSI).
What are Forex Indicators
Statistics are used to assess current conditions, as well as to predict financial and economic trends. Indicators are widely used in technical analysis to predict changes in stock trends or price models. In fundamental analysis, economic indicators that quantify current economic and industry conditions are used to provide an understanding of the future profitability potential of public joint-stock companies.
In an economic context, an indicator can be a measure, such as unemployment, which can be used to predict future economic trends. Common economic indicators are the unemployment rate, the construction of new housing and the consumer price index (CPI).
What is actually an indicator? First, let's define what constitutes an indicator in trading conditions.
A Forex market indicator is any representation of past price behavior in an attempt to predict some aspects of future price behavior.
This definition may seem trivial, but it is really worth it to clearly display in your mind exactly what the indicator is, and what its function is for us.
After reading this definition again, we can note that the indicators are trying to predict some aspects of future price behavior. This is where they become useful for us as traders. But there is one difference that beginners in the Forex market, as a rule, do not know that all indicators are divided into lagging and predictive.
Traders who trade on the price movement are not interested in off-screen, lagging indicators. Instead, they focus on what can be depicted in the actual chart window itself, and what can accurately determine the price level, which is a very likely price benchmark, or which gives signals in real time, indicating the current price trend. All these tools that provide real-time information are meant as indicators.
The main indicators that characterize the price movement are:
- Support and resistance levels
- Round Numbers Pivot Points
- Fibonacci Levels
- Bollinger Bands
Also, the main types of indicators include the following:
- Trend indicators;
- Moment indicators (Momentum);
In addition to simple indicators, there are also candlestick charts. This is based on the principles of trading on price movements and the most useful indicators displayed in real time that can be used to master the Forex market. Using the information from all three sections – trading on price movements, indicators and candlestick charts-in combination with your trading strategy, you will always be on the right track, which will really be the best approach for you to trade on the market Forex!