What is the best indicator for support and resistance?

What Is The Best Indicator For Support And Resistance?

What is the best indicator for support and resistance? New to trading or looking for clarity on indicators for support and resistance? Support and resistance are two important concepts that every trader and investor should understand. These terms refer to price levels where the market has a tend direction or stalls for some time.

In this blog post, we will take a closer look at what support and resistance indicators are, how to use support & resistance indicators, the benefits, the top 2 best support & resistance indicators used in trading, and how they can be used to identify support and resistance levels in the market.

Table of Contents

Introduction

When it comes to trading, one of the most important concepts to understand is that of support and resistance. These are levels where the price of an asset has difficulty moving past.

Support is the level at which buyers step in and push the price up, while resistance is the level at which sellers step in and push the price down.

What is an indicator?

Indicators are technical tools used by traders and investors to identify key price levels where the price of an asset is likely to experience a reversal or pause in its trend. These levels are based on past price action and are used to predict where the price is likely to move in the future.

What are support and resistance levels?

Support and resistance are two important concepts that every trader should understand. These terms refer to price levels where the market tends to reverse direction.

Support is the level where buying interest is strong enough to prevent the price from falling further. Resistance, in contrast, is the level where selling pressure is strong enough to prevent the price from rising further.

What are support and resistance indicators?

Support and resistance indicators are technical indicators that are used to identify key levels where the price of a security is likely to stall or reverse. These indicators are based on past price movements and are used by technical analysts to predict future price action.

There are many different support and resistance indicators available, but some of the most popular include trend lines, moving averages, and Fibonacci retracements. These indicators can be used alone or in combination with each other to help you identify potential support and resistance levels.

While support and resistance indicators can be helpful to traders and investors, it’s important to remember that they are not perfect. They are based on past price data, so they cannot predict future price movements with 100% accuracy.

However, they can be a useful tool for technical analysts to use in conjunction with other analysis techniques to make a well-informed decision on potential price levels.

Do support and resistance indicator work in trading?

In technical analysis, support and resistance are key concepts. Support is the level at which prices tend to find buyers and stop falling. Resistance is the level at which prices tend to find sellers and stop rising. By understanding how these concepts work, you can use them to your advantage when trading.

When prices are falling and approaching a support level, that’s a good time to buy. Conversely, when prices are rising and approaching a resistance level, that’s a good time to sell. By buying at support and selling at resistance, you can enter and exit trades at favorable prices.

How can you use support and resistance to your advantage?

Many Traders and investors are familiar with the concept of support and resistance, but few know how to use it to their advantage. In simple terms, support is the level at which an asset is unlikely to fall below, while resistance is the level at which it is unlikely to rise above.

By understanding these levels, traders and investors can better predict price movements and make more informed investment decisions.

There are a few different ways to identify support and resistance levels. The most common method is to look at historical data to see where prices have been bouncing off in that. Other methods include using technical indicators or analyzing price action.

Once you have identified a support or resistance level, you can use it to your advantage by placing your buy or sell orders at these levels. By doing so, you can increase your chances of making a profitable trade.

What are the benefits of support and resistance indicator?

There are many benefits to using support and resistance indicators to help manage your trade and investments. Some of the benefits include:

  1. It can help you to better understand a setup and its current state.
  2. It can help you to identify areas in which you need to buy an asset to improve and grow your trading capital.
  3. It can help you to make better strategic decisions about how to allocate your investments to maximize profits and minimize losses.
  4. It can help you to better understand the market imbalances & areas for entries
  5. It can help you to better forecast the future direction of the trend and market

What is the risk of support and resistance indicator?

There are a lot of risks associated with support and resistance indicators. This includes the potential for support levels to remain high for extended periods, while resistance levels can be maintained for short periods. Additionally, support and resistance levels can change unexpectedly, which can lead to significant losses or profits.

Top 3 best support and resistance indicator

There are several different indicators that traders can use to identify support and resistance levels. Some of the most popular indicators include moving averages, Fibonacci levels, and pivot points.

Moving Averages

Moving averages is a Trading Indicators, A technical analysis tool used to identify the direction of a stock/commodity or determine its area of support and resistance levels.

This is generally considered as a trend following indicator or lagging indicator based on past prices, Moving averages are customizable which implies that investors or traders can freely choose whatever time frame they desire when calculating an average.

The most common period used in moving averages is 15, 20, 30, 50, 100, and 200 days. However the shorter the time used to calculate or create an average the more sensitive it will be to price fluctuation and the longer the time, the less sensitive to price fluctuation.

A rising moving average indicates that a commodity or security is in an uptrend, while a declining moving average indicates that the commodity or security is in a downtrend. Moreover, upward momentum is confined when a short-term moving average crosses above a longer-term moving average in a downtrend.

Conversely, downtrend momentum is confined when a short-term moving average crosses below a longer-term moving average in an uptrend.

Fibonacci Levels

In finance Fibonacci retracement as the name implies is a technical tool used by technical investors/analysts for determining the support and resistance levels of a commodity.

It uses a Fibonacci sequence of numbers whose ratio provides potential price levels to which markets tend to retrace after a portion of a move before the trend continues in its original direction, this could be an uptrend or a downtrend.

A Fibonacci retracement forecast is created by picking extreme points, Peak formation high(PFH), and Peak formation low(PFL) on a chart thus dividing the vertical distance by the Fibonacci ratio.

In Fibonacci retracement, 0% is considered to be the start of the resistance, while 100% is a complete reversal of the initial price before the move.

Horizontal lines are drawn in the chats for these price levels to identify common support levels, the common Fibonacci levels are 23.6%, 38.2%, 50%, and 61.8%. Additionally, the Fibonacci retracement tool is mostly used by investors /technical traders which helps them identify strategic places/price levels for the transaction, stop losses, and target prices.

However, the retracement levels do not change which helps investors and traders in easy identification of price levels. Investors anticipate some price rejection or breaks at Fibonacci retracement price levels.

Tips for support and resistance indicators

Support and resistance indicators are valuable tools for traders, but they must be used correctly to be effective. Here are a few tips on how to use these indicators:

  • Look for indicators that are well-established and have been used by other traders successfully.
  • Don’t rely on support and resistance indicators alone, but use them in conjunction with other technical analysis tools.
  • Be sure to backtest any indicator you use before actually putting it into use in your trading.
  • Monitor your indicators closely and be prepared to adjust your trading strategy if they give false signals.
  • By following these tips, you can make sure that you are using support and resistance indicators correctly and increase your chances of success in the market.

Conclusion

Of course, support and resistance levels are never exact. They can be broken, and they also change over time. Nevertheless, by watching for these levels, you can gain a better understanding of market movements and make more informed trading decisions.

What is the best indicator for support and resistance? Different traders will have different opinions. However, some of the most commonly used indicators for support and resistance levels include moving averages, Fibonacci levels, and pivot points.

Traders can also use a combination of different indicators to arrive at the best levels for their trading strategy. Would you like to get more tips on support and resistance indicators? Join our discussion forum and never miss a topic.

what is the most reliable indicator for trading?

What Is The Most Reliable Indicator For Trading?

What is the most reliable indicator for trading? There is no single answer to this question as different traders place different levels of importance on different trading indicators. That being said, certain indicators are considered to be more reliable than others by the majority of traders.

In this blog post, we will discuss what trading indicator is, the three most reliable indicators for trading, the benefits of using indicators when trading, the risk of using an indicator, the four main types of technical indicators, the widely used trading indicators, and some things to remember when using technical indicators.

Table of Contents

Introduction

When it comes to trading, there is no shortage of opinions on what the best trading indicators are. Some say that the most important thing is to focus on the macro-economy, while others claim that technical analysis is the key to success.

What are technical indicators?

Technical indicators are signals that can be used to predict t future performance of financial assets, such as stock prices, currency prices, etc.

There are a variety of different technical indicators that can be used to track stock prices, and these can be divided into four main categories: Trend Following, Oscillators, Volatility, and Support/Resistance indicators.

Is it reasonable to trade without indicators?

There are a lot of different opinions out there about whether or not it’s reasonable to trade without indicators. Some traders argue that indicators are essential to making well-informed trading decisions, while others contend that indicators can be misleading and result in bad trades.

So, what’s the truth? Is it reasonable to trade without indicators? The answer may depend on who you ask, but there are a few things to keep in mind if you’re thinking about trading without indicators.

First, you’ll need to have a strong understanding of the market you’re trading in and the factors that influence it, I mean the macroeconomics.

Second, you’ll need to be comfortable with making decisions and trusting in your analysis. And finally, you should be aware that indicator-free trading is not for everyone – some people simply prefer to use indicators as part of their trading strategy.

What are the risks of using technical indicators?

Technical indicators are a type of indicator that use trend lines, volume, and price data to make predictions about future prices. Many technical indicators are used to predict stock prices, such as volume and trends.

However, there are several risks associated with using technical indicators. Volume and trend can be inaccurate indicators. Volume can be affected by a variety of factors, such as supply and demand, and can be inaccurate if the indicator is not calibrated appropriately.

The trend can be inaccurate if the indicator is not synchronized with market movements. Price data can be inaccurate if not properly calibrated, and Price data can also be affected by supply and demand which could result in a misleading signal.

What are the benefits of using technical indicators?

Technical indicators are used to identify trends and patterns in financial markets. They can be used to identify opportunities and warns against potential risks.

There are several benefits to using technical indicators.

  1. Technical indicators can provide valuable information about market trends and conditions.
  2. They can help you to identify potential lows in the market and identify possible entry points.
  3. They can provide you with valuable information about market conditions and the potential for future performance.
  4. They can help you to determine whether market conditions are changing in a way that could lead to profitable opportunities or risks.

What are the four main types of technical indicators?

In trading and investing, there are four main types of technical indicators which include: Trend Following indicators, Oscillators, Volatility indicators, and Support/Resistance indicators.

These technical indicators are grouped based on their respective functions, which range from revealing the average price of an asset over time to providing a clearer picture of support and resistance levels.

  1. Trend-Following

There are a variety of trend indicator tools available online. Some of the most popular trend indicator tools include moving average indicators. These tools provide a variety of information about the current state of the market and can be used to help identify any potential trends.

2. Oscillators

Oscillators are a type of technical analysis indicator that allows traders and investors to predict short-term movements in prices by measuring the difference between two consecutive high and low values. the Relative Strength Index is one of the most widely used oscillators.

3. Volatility Indicators

Volatility indicators are a tool to help you measure the degree to which stocks are likely to fluctuate in price. These indicators can be used to identify patterns in price movements, and to identify when a price change is likely to cause a large spread between the high and low points of the stock’s price range.

4. Support/Resistance Indicators

Support and resistance indicators can be used to identify when a market is experiencing a period of support. Some of these indicators include the moving average convergence divergence indicator.

How many indicators should a trader use when trading?

There is no definitive answer to this question since different traders have different opinions on the matter of the number of indicators to be used in trading. Some feel that they could use as many indicators as they want, provided they are profitable.

While others argue that indicators can be misleading and that it is possible to trade without them. so the best practice is to use a minimum of one indicator and a maximum of five indicators.

Ultimately, indicators are essential in helping to make informed decisions and it is up to the individual trader to decide what is best for them.

What are the four widely used reliable technical indicators?

Indicators are essential in helping to make well-informed decisions and several technical indicators are commonly used in trading and investing. Some of the most popular technical indicators include the Moving Averages, Relative strength index RSI, Bollinger Bands, and Pivot Points.

Moving Average Indicator – This is generally considered as a trend following indicator or lagging indicator based on past prices, Moving averages are considered a reliable indicator for trading and are customizable which implies that an investor or trader can freely choose whatever time frame they desire when calculating an average.

RSI Indicator – The relative strength index is a technical indicator majorly used in financial markets analysis. It is considered a reliable indicator for trading, then incorporated into the chart to measure the current and historical strength or weakness of a stock market or commodity based on the closing prices of recent trading periods.

Bollinger Bands® Indicator – Bollinger bands are a technical analysis tool developed by john Bollinger, It is primarily used for trading stocks, commodities, securities, and more. The bands comprise a volatility indicator that measures relatively the highs or lows of commodity prices about previous trades.

Pivot Points– A pivot point is a technical indicator used by forex traders as a price level gauge for potential future market movements. The pivot point indicator is used to determine bias as well as levels of support and resistance which in turn can be used as profit targets, stop losses, entries, and exits

Can I incorporate technical indicators into your trading strategy?

Technical analysis is a trading discipline that incorporates the analysis of market data, such as price and volume, to predict future market movements.

Many traders use technical indicators, which are mathematical formulas that generate buy and sell signals, to help them make trading decisions.

When incorporating technical indicators into your trading strategy, it is important to use them in conjunction with other market data, such as price action, fundamental analysis, and market sentiment.

By using technical indicators in combination with other data, you can make more informed trading decisions and improve your chances of success.

What are some things to remember when using technical indicators?

Technical indicators are mathematical calculations that traders typically use to analyze price charts to identify potential trading opportunities. Moving averages, Bollinger Bands, and MACD are some of the most popular technical indicators.

While technical indicators can be useful, it’s important to remember that they are just one tool in a trader’s toolbox. They should not be used in isolation, but rather in conjunction with other factors such as price action, risk management, and fundamental analysis.

When used correctly, technical indicators can help traders make more informed decisions about when to enter and exit trades.

Conclusion

We have concluded that the most reliable indicator for trading is price action. This is because it is the only indicator that is directly related to the price.

Price action is the most accurate indicator of future price movements. By following the price action, traders can make better predictions about where the market is headed.

Other indicators, such as moving averages, can be useful in certain circumstances, but they should not be relied on too heavily.

If you are interested in learning more about price action trading, and reliable indicators for trading, join our discussion forum and stay updated with the market trends.

trading indicators explained

Trading Indicators Explained.

Trading Indicators Explained! New to trading or struggling to understand what a trading indicator is and how it works? Commodity, security, and currency traders need to be able to understand the dynamics of the different trading indicators to make profitable trades.

In this article, we will discuss what a trading indicator is. the different types of trading indicators, tips for using a trading indicator, benefits, and the most popular trading indicator used by traders and investors trading.

Table of Contents

Important tool traders and investors use to make investment decisions is a trading indicator. A trading indicator is used to measure the market performance of a stock, commodity, or currency, it can be used to determine when a particular buy or sell order should be placed.

What is a trading indicator?

Trading indicators are a collection of tools used by traders and investors to identify potential market opportunities. There are many different types of trading indicators, but some of the most common ones include Bollinger Bands, Moving Averages(MA), Average Directional Index(ADX), and Relative Strength Index(RSI).

Some good reasons to use trading indicators are to help traders and investors identify potential market opportunities, additionally to improve the decision-making process, and to help better understand commodities, securities, and currency market performances.

What are the benefits of using trading indicators?

As a trader using trading indicators has been a nice and wonderful decision throughout the trading and there are many benefits to using trading indicators.

Here are a few that come to mind:

  • Enables traders and investors to stay on track and make informed trading decisions.
  • Help traders and investors understand your trading signals and represent the most important information in your trading strategy.
  • Help traders and investors identify patterns and trends in your data and help you create successful trading plans.
  • Enables traders and investors to stay informed on trading activity and how it compares to other traders.
  • Helps traders and investors track progress and overall trading results.

The different types of trading indicators

Many different types of trading indicators can be used to help traders and investors make better trading and investment decisions. Some of the most common indicators used in trading include price momentum, volume, and MACD.

The choice of using trading may vary among traders and investors, this is a result of trading style, trading strategy, trading capital, and markets to be traded. In the world of finance, traders and investors make decisions based on their trading plan, some are technical traders, some are fundamental traders, and some are sentiment.

Using a trading indicator is based on choice, however, the most important thing is to make a good trading and investment decision and become profitable in the long run.

How to use trading indicators

There is no definite answer to this, however, the type of indicator traders and investors uses to develop a strategy depends on the type of strategy the individual intends to build, it could be a Trend trading strategy, Mean reversion trading strategy, or volume tradin strategy.

It also relates to trading style and risk tolerance. Traders and investors who seek long-term moves with large profits might focus on a trend-following strategy, and, therefore, utilize a trend-following indicator such as a moving average.

Traders and investors who seem to be interested in small moves with frequent small gains might be more interested in a strategy based on volatility. Again, different types of indicators may be used for confirmation and not as proof of future market direction.

Trading indicators are widely used in trading to help both beginner traders, armature, and professionals to make well-informed trading decisions. below are some of the most used trading indicators:

Bollinger Bands: Bollinger bands is a technical analysis tool developed by John Bollinger, It is primarily used for trading stocks, commodities, securities, and more. The bands comprise a volatility indicator that measures relatively the highs or lows of commodity prices about previous trades.

Moving Averages(MA): Moving averages is a trading indicator, A technical analysis tool used to calculate or identify the direction of a stock/commodity or determine its area of support and resistance levels.

Relative Strength Index(RSI): Relative strength index is a technical Trading indicator majorly used in financial markets analysis. It is incorporated into the chart to measure the current and historical strength or weakness of a stock market or commodity based on the closing prices of a recent trading period.

Conclusion

In the world of finance when it comes to trading indicators, there are a few things to keep in mind. First, indicators are not always perfect, they can be inaccurate in the short and long term. Secondly, different indicators might be better suited for different trading strategies. Finally, it is important to understand the different types of indicators and how to use them to achieve trading success.

We would love to hear from you, do you have any contributions to share or question to ask on this topic? Please share your thoughts and experiences in the community forum or comments below, and let us know what you think, we look forward to reading and answering your questions!

Powerful Crypto & Forex trading indicator

Top 10 Powerful Trading Indicators

Wondering if there could be technical indicators worth paying attention to for insight into market behavior? Continue reading to explore the Top 10 Powerful Trading Indicators.

In this article, we will be emphasizing trading indicators which will enlighten you on why every trading indicator is the secret ingredient to profitable trading.

Table of Contents

What Is Trading Indicator?

As we all know, trading indicators are mathematical calculations, which are plotted as lines on a price chart and can help traders or investors to identify certain signals and trends within the market.

10 Best trading indicators.
1. Moving average (MA)
2. Exponential moving average (EMA)
3. Stochastic oscillator
4. Moving average convergence divergence (MACD)
5. Bollinger bands
6. Fibonacci retracement
7. Relative strength index (RSI)
8. Ichimoku cloud
9. Standard deviation
10. Average directional index

Using trading indicators is part of any technical trader’s strategy. Paired with the right risk management tools, it could help you gain more insight into price trends, potential reversals, and continuation. It is considered to be a cryptocurrency or Forex investor’s vital tool for good decision making.

Moving Average (MA) Trading Indicator

Moving averages is a Trading Indicators, A technical analysis tool used to calculate or identify the direction of a stock/commodity or determine its area of support and resistance levels.

This is generally considered as a trend following indicator or lagging indicator based on past prices, Moving averages are totally customizable which implies that an investor or trader can freely choose whatever time frame they desire when calculating an average.

The most common time period used in moving averages is 15, 20, 30, 50, 100, and 200 days. However the shorter the time span used to calculate or create an average the more sensitive it will be to price fluctuation and the longer the time span, the less sensitive to price fluctuation.

A rising moving average indicates that a commodity or security is in an uptrend, while a declining moving average indicates that the commodity or security is in a downtrend. Moreover, upward momentum is confined when a short-term moving average crosses above a longer-term moving average in a downtrend.

Conversely, downtrend momentum is confined when a short-term moving average crosses below a longer-term moving average in an uptrend.

Exponential Moving Average (EMA) Trading Indicators

These moving averages are Trading Indicators one of the oldest and most used trading indicators, Traders and Investors incorporate this indicator into chats to help them determine trend direction and relative strength of a security or commodity.

   Exponential Moving Average (EMA) Indicators chart
Exponential Moving Average (EMA) Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

The Exponential moving average (EMA) is similar to a simple moving average (SMA) tho it measures a trend direction of a period of its unique calculations, Exponential moving averages (EMA) follow market prices more closely. Exponential moving averages are basically used to determine trend direction.

EMA’s tends to support the price action while a falling EMA tends to provide resistance to price action. This reinforces the strategy of investors or retail traders to buy(go long) when the price is near the rising Exponential moving averages in a downtrend and thus prompting them to sell (go Short) when the price is near the falling EMA in a downtrend.

Stochastic Oscillator Trading Indicators

This is basically a technical analysis tool used in commodity or security trading, The stochastic oscillator is a momentum trading indicator that uses support and resistance levels. It in terms refers to the point of a current price in relation to its price range over a predetermined period of time.

  Stochastic Oscillator Indicators chart
Stochastic Oscillator Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

stochastic oscillator is a range-bound tool, Meaning that it has a reading of between 0 and 100. This makes it unique as a useful indicator for overbought and oversold conditions, Reading over 80 are considered to be in the overbought range by investor and traders while reading under 20 is considered oversold.

However stochastic indicator sating generally consists of two major lines, One reflecting the actual value of the oscillator and the other reflecting its three-day Simple moving average, the intersection of these two lines is considered by investors and traders that a reversal might be in play and it is mostly used in our technical analysis.

It indicates a large shift in momentum and investors’ perspective, More often than not divergence between the stochastic oscillator and trending price action is also speculated as a potential reversal signal.

Moving Average Convergence Divergence (MACD)

The moving average convergence divergence indicator is primarily a momentum oscillator used to identify or trade potential trends. It is not typically used to identify overbought and oversold conditions in prices, It shows the relationship between two moving averages of a commodity or stock price.

Moving averages convergence divergence is a stock or commodity indicator primarily used in technical analysis, Investors and traders consider MACD bullish when the lines cross above the signal line from below and further below the zero lines the stronger the bullish it may be.

MACD crossing below the signal lines is basically considered to be bearish and prompts investors to sell(go short). However divergence between the MACD and the price action is considered a stronger signal when confirmed by crossover.

Bollinger Bands Trading Indicators

Bollinger bands are a technical analysis tool developed by john Bollinger, It is primarily used for trading stocks, commodities, securities, and more. The bands comprise a volatility indicator that measures relatively the highs or lows of commodity prices in relation to previous trades. Using standard deviation volatility is measured therefore changes with increases or decreases in volatility.

 Bollinger Bands Indicators chart
(Bollinger Bands)Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

Its band expands when there is relatively a price increase and compresses as price decreases. Bollinger bands are applied to a variety of trading securities due to their dynamic nature. However, it is basically comprised of three lines, The Upper, Middle, and lower bands. The upper and lower bands are positioned on either side while the middle is a moving average whose parameters are determined by the trader or investor.

The position of these bands provides information on how strong the trend is and how also detecting potentials of high and lows price levels may be expected in the immediate future. Moreover, Bollinger bands can also be used to know how strong an asset is increasing and when it is likely to lose strength and reverse/change direction.

Fibonacci Retracement Trading Indicators

In finance Fibonacci retracement as the name implies is a technical tool used by technical investors/analysts for determining the support and resistance levels of a commodity. It uses a Fibonacci sequence of numbers whose ratio provides potential price levels to which markets tend to retrace after a portion of a move before the trend continues in its original direction, this could be an uptrend or a downtrend.

  Trading Indicators chart
(Fibonacci Retracement)Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

A Fibonacci retracement forecast is created by picking extreme points, Peak formation high(PFH), and Peak formation low(PFL) on a chat thus dividing the vertical distance by the Fibonacci ratio. In Fibonacci retracement, 0% is considered to be the start of the resistance, while 100% is a complete reversal of the initial price before the move.

Horizontal lines are drawn in the chats for these price levels to identify common support levels, the common Fibonacci levels are 23.6%, 38.2%, 50%, and 61.8%. Additionally, the Fibonacci retracement tool is mostly used by investors /technical traders which help them identify strategic places/price levels for transaction, stop losses, and target prices.

However, the retracement levels do not change which helps investors and traders in easy identification of price levels. Investors anticipate some price rejection or breaks at Fibonacci retracement price levels.

Relative Strength Index Trading Indicators

The relative strength index is a technical Trading indicator majorly used in financial markets analysis. It is incorporated into the chart to measure the current and historical strength or weakness of a stock market or commodity based on the closing prices of recent trading periods.

 Relative Strength Index Indicators chart
(Relative Strength Index) Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

RSI is displayed as an oscillator (a line graph that moves between two extreme points ), RSI has a reading of 0-100. Generally, if the RSI surpasses the horizontal 30 reference level, it indicates a bullish sign and a bearish sign when it slides below the horizontal 70 reference level.

The RSI is mostly used in a 14-day time frame. Additionally in an uptrend or bull market, the RSI tends to remain in the 40 – 90 range with the 40 – 50 level acting as support. Moreover, during a downtrend or bearish market, the RSI tends to stay between the 10 – 60 range with the 50 – 60 level acting as resistance.

Ranges of the RSI vary depending on the configuration of the investor or trader. The relative strength index provides signals that prompt investors and speculators to go long(BUY) when the security/Commodity is oversold and to short(SELL) when it is overbought.

Ichimoku Cloud Trading Indicators

The Ichimoku cloud is an oscillator of technical analysis that shows support and resistance levels as well as momentum and trend direction. Ichimoku takes multiple averages, therefore, plotting them on a chart, it makes use of these figures to complete a “cloud” which attempts to forecast where the price may find support or resistance.

  Ichimoku Cloud Indicators chart
(Ichimoku Cloud)Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

The Ichimoku cloud is basically comprised of five major lines or calculations, two of which comprise a cloud where the difference between the two trend line is shaded in.

The conversion line(Tekan – San) is perceived to be the short-term line and it represents the average of the high and low for the period(9 – period high + 9 periods low / 2).

The baseline (Kijon – San), This is the long-term line and it’s calculated as the average of the high and low for the 26 – period (26 – period high + 26 – period low / 2).

The lagging span (Chickou span), A lagging line that represents the closing price for the previous 26 periods. The lines enable investors to easily compare the current price movement with the movement from 26 periods past.

The leading span A(Senkou Span), is utilized as a leading indicator defined for future 26 periods. the values for this indicator are obtained as the middle point of tenkan-san and kijun-san based on the past last 26 periods (conversion line + Baseline) / 2 ).

The leading Span B(Senkou Span B), is used as a leading indicator since it is calculated for 26 periods ahead based on the average of the 52 periods high and 52 -periods low (52 -periods high – 52 periods low / 2 ).

The Ichimoku cloud(Kumo) has highly notable features presented on the chart and the area between the leading span A and the leading span B lines. it is a key part of the technical indicator, whenever the price is below the cloud, the trend tends to be down and when the price is above the cloud trend tends to be up.

It additionally is used by investors or traders because it provides a certain estimation about future price levels and can be incorporated as a trading strategy to determine trend direction, support & resistance levels, and also determine crossovers.

Standard Deviation Trading Indicators

The standard deviation is a statistical term that refers basically to the volatility of price in currency pairs. it is used as a Trading Indicators, It, therefore, measures how widely values are dispersed from the mean or average, Dispersion is basically the effective difference between the actual closing value price and the average closing value.

Standard deviation is the square root of the variance and the average of the squared deviation derived from the mean. A high standard deviation is present when the price of a studied currency volatility changes and has large daily ranges, However, low structured deviation values take place when currencies are trading on a range or consolidation.

 Standard Deviation Indicators chart
(Standard Deviation) Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

This implies that prices are more stable and less volatile. Major tops and bottoms are important/ Vital changes that are accompanied by high volatility as prices reflect the psychology of market participants as well as fundamentals.

The standard deviation can be used in two different ways:

  • The higher the value of the indicator, the wider the spread between prices and basically its moving averages. The more volatile the instrument and the more dispersed the price bar will become.
  • The lower the value of the indicator, the smaller the spread between the prices becomes with its moving averages, the lower volatile the instrument and the closer to each other the price bars become.

Average Directional Index Trading Indicators

The average directional index(ADX) is a Trading Indicator used by the majority of traders or investors to determine the strength of a trend. The trend can either be an up trend, a downtrend, else a ranging market that is a result of low volatility.

 Average Directional Index chart
(Average Directional Index)Analysis by Chikwem Chinedu Ogugua on Liquiditytradeideas

Determining the strength of a trend using two indicators, The negative direction indicator(-Di) and the positive direction indicator(+DI). ADX makes use of three separate lines to help in assessing whether a trade should be taking long or short, or can even be avoided.

ADX indicator is expected to be above 25 when the trend is strong and 20 if the price is trend less or weak according to

Conclusion

All of these Trading Indicators have their place and can help in identifying what the price of an asset will do. For instance, Moving Average (MA) is an indicator used to identify the direction of a current price trend, without the interference of shorter-term price spikes;

A stochastic oscillator is an indicator that compares a specific closing price of an asset to a range of its prices over time; MACD is an indicator that detects changes in momentum by comparing two moving averages, and a Bollinger band is an indicator that provides a range within which the price of an asset typically trades.

You can use your knowledge and risk appetite as a measure to decide which of these trading indicators best suit your trading strategy.
Note that the indicators are some of the most popular choices for retail traders and investors. Whether you’re interested in Forex Trading, Commodities Trading, Stock Trading, or Crypto Currency Trading, it can be helpful to use a technical analysis tool as part of your strategy.

What are your thoughts on the Top 10 Powerful Trading Indicators? Is it a useful tool, or is it a waste of time? Let us know by commenting on this post, and be sure to check back in the near future for more trading-related content.