Archive : Technical Analysis

Whenever the question of indicator-accuracy raises its inquiring, bespectacled head amongst the global fraternity of bruised, battered and sceptical forex traders there is rarely a definitive consensus. The ‘Zig Zag’ indicator is certainly no exception to this with its Marmite ability to divide opinion and invoke contentious exchanges as to its usefulness as a forex trading indicator. The fact [...]

Most commonly known as the “stop and reversal” indicator the Parabolic SAR is one of the most straightforward indicators for traders to interpret. Welles Wilder, also of average directional indicator and relative strength indicator fame, developed this indicator with the purpose of attempting to pinpoint the highest probability of price reversing.  He suggested that, used in conjunction with [...]

Technical analysts have seen several clear-cut opportunities to enter the market over the past two trading days as several currency pairs and commodities approach significant resistance levels. Classic reversal patterns has successfully played out in both gold and the S&P Index. The reliability of these candles patterns at important resistance levels reinforces that often the most straightforward [...]

The stochastic oscillator belongs to the family of momentum indicators which include the RSI and the MACD. Like the RSI, the stochastic oscillator was developed to preempt the strength of momentum in a stock, currency or commodity. It does this by taking the closing prices and applying this to the highs and lows of a specific trading period. The idea is that closing prices should represent the direction [...]

The Moving Average Convergence-Divergence indicator was developed as an attempt to try to create a reliable leading indicator out of two lagging indicators. This design in applying two trend-following moving average indicators to create the momentum oscillator that we know today as the MACD was the ingenuity of Gerald Appel during the 1970’s. The importance of this indicator has grown with increasingly [...]

RSI is a momentum indicator and belongs to the family of oscillators which can help traders to determine whether a stock, currency or commodity is likely to continue or reverse from its current trend. Developed by Welles Wilder as a tool to help predict price reversals, the RSI forms a very important trading tool for technical trend analysis and can be incredibly useful to help determine a good time [...]

Understanding support and resistance is fundamental to successful trading. A grasp on these two very simple concepts can allow traders to enter and exit trades confidently, seeking price areas where buying and selling will occur in enough quantity to resist price movements. The basis of this being the ‘memory’ that price has and which can be seen by looking to the left, rather than the right, of [...]

Average directional index is a useful indicator for traders to use in order to gain an objective understanding of the trend. It is a group of three directional indicators which, when applied together, can form a trading system which both defines the direction and the strength of a trend. Most indicators such as moving averages will offer an analysis of the trend direction whilst oscillators and momentum [...]

In uncertain trading times it is important to be able to see as far in front as the market will allow. The use of certain indicators alone can give traders a vague insight into what comes next in reference to what happened the last time. These can be in the form of pre-defined patterns, indicator behavior or price-action. Having an edge is the mantra of professional traders and this can be vital to [...]

The stock price will either bounce off the support level or break it! Who knows for sure what kind of candlestick will be formed the next day or week? Every day, traders keep scanning the financial markets for entry points at support levels to trade long. The more a support level has been verified in the past, the more important the level. However the support level is not meant to support a decline [...]

BIIB stock price hit $100 per share on Wednesday gaining 100% since June 2010. The biotechnology company, which focuses on products for the treatment of neurological disorders and other serious diseases, has been one of the top performers in healthcare sector lately. Applying technical analysis on weekly and monthly graphs would have predicted this year’s uptrend of Biogen IDEC’s stock. Whether [...]