Forex Technical Analysis Trading Strategies

Studying price movement is the realm of forex technical analysis. The history of price movements are tracked via price charts and these are used to predict future market direction.

Most Forex brokers online will have numerous forex technical trading analysis tools available for their clients. Below are some of the more popular ones.

Forex Bollinger Bands

Forex Bollinger Bands provide a means of measuring the volatility of the market. 3 lines make up these bands:

1. A simple moving average takes up the middle.

2. An upper band indicating simple moving average plus two standard deviations.

3. A lower band indicating simple moving average minus two standard deviations.

It works like this: when the bands are spread apart, it shows high market volatility. Bands coming closer together indicates lower volatility.

The middle band generally remains between the upper and lower bands. Technical borders is another way of looking at the outer bands. This is because whenever the middle band approaches one of the outer bands, it generally bounces back towards the middle.

This effect is called the Bollinger Bounce. Keep this in mind so when you see the outer band being approached by the middle band, chances are it will bounce back.

A scenario where there are fluctuating prices and no definite trends are ideal for this strategy.

Something called the Bollinger Squeeze is an excellent tool to help you see trends ahead of time. A breakout is imminent when the bands are squeezing together closely. Should the middle band penetrate the lower or upper band, its an indication that prices are likely to continue in that direction.

Forex Parabolic SAR

Spotting trend reversals is the main usage of the Parabolic SAR indicator. Among all indicators, this is the easiest to read. Dots are placed in the charts below or above the candles, although the formula which computes the placement of the dots is beyond the scope of this article.

You should consider selling when the dots are above the candles, and consider buying when they are below the candles.

A market condition characterized by definite downward or upward trends is ideal for using Parabolic SAR. Markets showing mall price movements however are not predictive using Parabolic SAR.

Forex Stochastics

Measuring oversold and overbought market conditions is the specialty of Forex stochastics. It has a 0-100 scale. Forex stochastics lines over 80 indicate an overbought market and that there may be a downward movement soon. Lines below 20 indicate an oversold market and a possible upward movement soon.

For determining the right time to secure profits and issue sell or buy orders, Forex stochastics can be a helpful form of forex technical analysis. As always though, avoid using a single indicator. A combination of indicators adjusted to your trading system is the ideal approach.

If you are interested in trading based on forex technical analysis, then you may be interested in one of the popular forex trading robots like FAP Turbo Robot Software. The forex robot can monitor technical trends and make trades automatically based on the parameters that you enter into the robot software.

In order to get time tested forex trading strategies with which to base your technical analysis, and to temper your technical decisions with solid fundamental analysis, which is always a wise move, then you should consider obtaining some professional forex training from recognized experts who have spent years refining their successful strategies.

Here are a few of the top forex training courses available on the market:

1. Forex Trading Made EZ (Easy)

2. Forex Mentor by Peter Bain

3. Forex Profit Accelerator by Bill Poulos