Plotting a trend line on a Forex chart gives very valuable information. In addition, it will also help to determine good entry and exit points, best positioning for profit taking and placing protective stops. So, shall we learn how to draw forex entry exit points line to make it our good friend in profitable forex trading? That is why when the trend is going to change our trend line will be crossed, which therefore will give us a signal that the price can start moving in another direction.
In the uptrend, Forex trend line is drawn through the lowest swing-points of the price move. Connecting at least two «lowest lows» will create a trend line. In the down trend, trend line is drawn through the highest swing-points of the price move. Connecting at least two «highest highs» will create a trend line. Keep in mind that same charts may show slightly different “highs” and “lows” if you try to compare different Forex brokers. Another sample of drawing trend lines: main and inner downtrend lines.
Forex trading is a high risk investment. All materials are published for educational purposes only. Leonardo Fibonacci is a famous Italian mathematician, founder of a simple series of numbers that refer to ratios valid for natural proportions of things on the planet. If to measure the ratio of any number to one of the next higher number the result will be 0. 618 — are the most important to watch for. Fibonacci Extension Levels are used as targets for taking profit: 0.
618 — here are the most useful for traders. Fibonacci retracement and extension levels carry important information for experienced as well as novice Forex traders as they help to identify entry and exit points during the trade. This chapter will introduce traders to basic rules of applying Fibonacci method in Forex. And now let’s get straight to the point. Where and how to use Fibonacci study on Forex charts? As you have noticed, there are some A, B, C, D points on the chart. They represent the highest spikes of the price moves or simply highest price swings.
To apply Fibonacci study to the price moves we will always look for those points. Forex trading is a high risk investment. All materials are published for educational purposes only. MACD historam staying above zero line — market is bullish, below — bearish. MACD histogram flipping over zero line — confirmation of a strength of a current trend. MACD histogram diverges from price on the chart — signal of an upcoming reversal. MACD is the simplest and very reliable indicators used by many Forex traders.
It calculates and displays the difference between the two moving averages at any time. MACD developer Gerald Appel has found to be the most suitable for both faster and slower moving markets. These custom MACD settings will make indicator signal faster, however, the rate of false signals is going to increase. MACD indicator is based on Moving Averages in their simplest form. MACD line is created when longer Moving Average is subtracted from shorter Moving Average. As a result a momentum oscillator is created that oscillates above and below zero and has no lower or upper limits. MACD also has a Trigger line.
Combined in a simple lines crossover strategy, MACD line and trigger line crossover outperforms EMAs crossover. 12 EMA and 26 EMA on the chart have crossed. If to take 26 EMA and imagine that it is a flat line, then the distance between this line and 12 EMA would represent the distance from MACD line to indicator’s zero line. The further MACD line goes from zero line, the wider is the gap between 12EMA and 26 EMA on the chart. The closer MACD moves to zero line, the closer are 12 and 26 EMA. MACD histogram measures the distance between MACD line and MACD trigger line.