Forex Trading Guide - Fxstreet Section

Welcome to Forex Trading Guide

Article

Two Great Forex Indicators: Bollinger Bands and Fibonacci Retracements.
Adrian Pablo

Forex trading is a fascinating way of earning a living online, and if you are seriously considering entering this fascinating world of forex trading you must consider, by all means, the learning and understanding of a number of indicators that will give you invaluable help on predicting with a high probability the directions the forex market may take as you carefully analyze the price charts for any currency you are trading at the moment. Two of these important indicators are: “Bollinger Bands” and “Fibonacci Retracements”.

The basic interpretation of “Bollinger Bands” is that prices tend to stay within the space formed by the tracings of the upper and lower bands. The distinctive characteristic of “Bollinger Bands” is that the spacing between the bands varies based on the volatility of the prices. During periods of extreme currency price changes (i.e., high volatility), the bands widen to become more forgiving. During periods of low volatility, the bands narrow to contain currency prices. The bands are plotted two standard deviations above and below a simple moving average. They indicate a "sell" when prices are above the moving average (or close to the upper band) and a "buy" when prices are below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.

“Fibonacci retracement levels” are a sequence of numbers discovered by the noted mathematician Leonardo da Pisa during the twelfth century. These numbers describe cycles found throughout nature and when applied to technical analysis can be used to find pullbacks in the currency market.


“Fibonacci retracement levels” are a quite effective way to see the future (at least in the forex markets), i.e., it involves anticipating changes in trends as prices near the lines created by the Fibonacci studies. After a significant price move (either up or down), prices will often retrace a significant portion (if not all) of the original move. As prices retrace, support and resistance levels often occur at or near the “Fibonacci Retracement levels” (See my articles on “Fibonacci trading” for more detail about this).


In the currency markets, the commonly used sequence of ratios is 23.6 %, 38.2%, 50% and 61.8%. Fibonacci retracement levels can easily be displayed by connecting a trend line from a perceived high point to a perceived low point. By taking the difference between the high and low, the user can apply the % ratios to achieve the desired pullbacks.

About the author:
Adrian Pablo; Forex trader and freelance writer.

>> http://www.1-forex.com

Fxstreet News

fxstreet

FXstreet.com (London) - GBP/USD has traded most of this session above the 1.5 mark, at time extending up to 50 pips clear. While the pair trades at 1.5035, upside remaind capped to an extent by the prevailing domestic issues in the UK. Political ...

Forex: Pound plagued, upside capped - FXStreet.com

2010-03-08 15:32:05 - FXstreet.com, the leading independent portal dedicated to the Foreign Exchange (Forex) market, announces the online version of its International Traders Conference to be held on April 6-8, 2010. Barcelona, Spain — March 5 ...

FXstreet.com presents the ITC online: a three-day educational Forex ... - PR Inside

FXstreet.com (Barcelona) - Foreign investors bought C$11.23B worth of Canadian securities in December, beating expectations of only C$7.56B for the month compared to November's figures of C$10.54B. Canadian investments in foreign securities, on the ...

Canada: Foreign investment in securities surpasses ... - FXStreet.com

Ilian Yotov is familiar to many traders as the creator of The Quarters Theory method and as a Forex market strategist on Traders Television Network and Forex Talk Live. Ilian is the founder of AllThingsForex.com and TraderTape.com and the host of the ...

All Things Forex - Forex Pros