A trader's true friends when making money on financial markets are indicators - specially developed analysis tools that automate the process of searching for certain repeating patterns on a chart. The use of these assistants is largely based on the ideas of technical analysis. Therefore, every novice trader should learn a few things at the beginning of his journey. important points regarding what they are technical indicators for Forex, what they are and how to use them correctly.

The history of the origins of technical analysis

You can often hear opinions that technical analysis is a young science. In fact, this is a serious misconception, since the roots of the technical approach go back to ancient times. For example, Joseph Vega, back on the Dutch stock exchange of the 17th century, was looking for patterns in price movements, and in Japan, rice traders developed the basics of a candlestick strategy, which today is actively used by all followers of technical analysis on Forex, in binary options, on stock exchanges, etc.

However, in the modern interpretation, the founder of technical analysis is considered to be Charles Dow, who developed in the 20s of the 20th century the theory of searching for price patterns, which formed the basis for the works of Ralph Nelson, William Hahn, Richard Wyckoff and others. Each of these luminaries contributed to the formation and development of technical analysis.

Subsequently, the works of these analysts were finalized, and by 1950, a book was written by J. Magee and Rob Edwards that embodied all the most successful developments in the field of technical analysis. It was called “Technical Analysis of Stock Market Trends.”

Later, with the advent of computers and the active development of Internet trading technical analysis simply blossomed - new types of charts, a large number of indicators, etc. appeared. Modern traders who are mastering Forex should pay attention to the book “The Complete Course of Technical Analysis” by Jack Schwaber, which consists of over 800 pages of theoretical material and charts with explanatory examples.

Technical indicators for finding patterns

When using technical analysis, a trader will definitely use technical indicators on Forex to implement a particular strategy. Like the figures of graphical analysis, there are a lot of such tools, but among them there are those that have already become classic, and therefore the methods embedded in them can be found in the work of other tools. Therefore, below it is worth briefly considering these basic technical analysis tools.

Determining the trend with the “Moving Average”

As the first indicator, we consider the indicator that has probably brought the most money to traders around the world. We are talking about moving averages (English moving average or abbreviated MA), the algorithm of which adds up prices in individual periods and divides the resulting figure by the number of such periods. Simply put, the MA finds the arithmetic average, using it to display a price smoothing line on the chart.

Here is an example of a 20 period MA on a weekly AUD/USD chart, using candle closing prices for smoothing. Thanks to this, market noise and random impulses are cut out, and the trader sees exactly where the price is most likely to move.

If the candles are above the MA line, then the trend is considered to be up and prices are likely to continue rising. If the candles are below the MA line, then this is a signal that the fall may continue.

Depending on what price values ​​are taken to construct a moving average (opening, closing, average) and what method is used to obtain average values, there are several types of Moving Average:

• Simple MA (SMA) - simple;
• Exponential MA (EMA) - exponential;
• Weighted MA (WMA) - weighted.

These designations are worth remembering, since one of the following abbreviations may be used when describing strategies. Despite various types moving there is no particular difference between them, especially if you take them with a rather large period for a chart with a large time frame.

Here, for example, is what a 4-hour chart of EUR/USD looks like with 3 moving averages with a period of 50 added to it.

Using moving averages on a chart

Sliding sliders can be used for the following purposes:

• when determining a trend;
• when the trend changes;
• as a support/resistance level.

Below in the screenshot you can see how the moving average simultaneously showed that the trend was directed downward, and also provided good entry points along the trend when the price rolled back and approached the MA line, which acts as resistance in a downward trend.

Usually traders use not one moving average, but several. One is taken fast (with a short period), and the second slow (with a longer period).

This allows us to draw the following conclusions:

• as long as the fast MA stays above the upper one, the upward trend continues;
• if the fast MA is under the slow one, the downward trend continues;
• the intersection of moving averages is a sign of a trend change.

The main problem when using moving averages is sideways, during which trending technical indicators on Forex give many false signals.

Accumulation & Distribution (A/D)

A popular tool that compares price changes and trading volume. The effective use of this tool is permissible only on those instruments for which the real market volume is known. Therefore, it should not be used for currency pairs.

But if technical indicators on Forex are used to make money on stocks, stock indices or futures, then A/D becomes an extremely useful analysis tool.

Its purpose is to determine the current trend and predict its reversal. The indicator is displayed in a separate window, where the growth of its signal line indicates stable development of the trend. When the signal line rises far up, you should wait for a market reversal, which you can enter after a small sideways trend, where price consolidation occurs.

Average Directional Index (ADX)

This indicator is designed to show the strength of the current trend, thanks to which the trader always knows exactly whether it is worth opening new transactions in the direction of the current trend or not. ADX is displayed in a new window, where you should pay attention to its three signal lines DI+ (green), DI- (red) and ADX (blue).

If DI+ is higher than DI-, then you can buy binary options“Higher”, and if vice versa, then “Lower”. At the same time, it is worth watching the blue ADX line. If it rises, then the strength of the current trend, whatever it may be, increases.

Aroon indicator

Another very interesting technical indicator for Forex is called Aroon. It is used to determine the direction of the current trend and its strength. That is, it is similar to ADX, but uses a slightly different calculation algorithm.

The indicator constantly compares the peaks, displaying their changes in the form of two lines - blue and orange. The first of them shows how much time has passed since the price updated local maximums. The second does the same, but for minimums.

It is most effective to use the indicator to find trend change points. For example, in the screenshot below you can see that the intersection of the blue and orange lines indicated a change from a downward trend to an upward one.

MACD Oscillator

A very interesting oscillator is the MACD, which is widely used in financial markets. This indicator is equally good at giving signals in the direction of the trend and very accurately predicts reversals when divergence forms in the market.

The simplest and most effective signal will be the intersection of the indicator signal lines.

RSI Oscillator

Another very useful oscillator is the RSI, which uses a slightly different operating principle. This analysis tool analyzes excessive price deviation when quotes are no longer trading heavily, which portends fading momentum and a reversal.

Such areas are visually quite easy to identify. You just need to follow the RSI signal line, which moves in a separate window. If it rises far up, then this means that the price is overbought and it is important to open short positions, counting on a reversal and a fall in the price.

If the signal line, on the contrary, has dropped very low, then they say that the price is in the oversold area, and therefore purchases are urgent.

On Balance Volume or OBV

The OBV trend indicator uses a preliminary analysis of trading volumes to generate signals, which are compared with the direction of price movement. The principle of operation of On Balance Volume is as simple as it is effective. If prices rise, then the indicator assigns a positive value to the traded volumes, but if they fall, then, accordingly, a negative value.

The trader can only follow the OBV signal line. Its growth makes it important to buy contracts to increase prices, and its downward movement allows you to play short.

Stochastic Oscillator

The Stochastic Oscillator can easily claim to be the most widely used indicator in the world. It is similar to the already discussed RSI, since it also belongs to the subtype of oscillators that determine overbought and oversold prices.

To determine the critical price deviation, the indicator measures the strength of momentum, and the trader can trade market reversals using the intersection of signal lines in overbought/oversold areas and identifying discrepancies (divergences) when the price on the chart does one thing and the oscillator lines do another.

Above in the screenshot you can see that on the chart the price drew two successively lower minimums, while the signal lines drew two corresponding minimums, where the second is not lower than the first, but, on the contrary, higher. That is, there is a discrepancy between the price and the Stochastic, which is always a harbinger of a reversal.

Volume indicators

There is a separate branch in technical analysis that studies trading volumes and their impact on markets. The importance of volumetric analysis was first noticed and described by Richard Wyckoff, whose ideas became the basis of VSA. Trading techniques based on analysis rely in their judgments on the fact that a major player always leaves a mark on the market, since, due to the structure of the market, he cannot simply enter or exit a position. Therefore, a trader who monitors volumes can always notice the market maker’s attempts to take some actions on the market, after which all that remains is to simply repeat them and earn money.

However, it is extremely difficult to effectively use volumes on Forex when analyzing currency pairs, because the foreign exchange market has a decentralized structure, and therefore it is impossible to summarize statistics and determine the exact trading volume that has passed over a period of time.

However, many brokers understand how important it is to take volume data into account when trading. Therefore, they provide data about them as part of their system. For example, large Forex broker Oanda provides such histograms showing how his clients are trading.

For example, the following screenshot shows placed limit orders (left column) and held open positions (right column). By the ratio of open buy and sell orders, as well as by identifying significant price levels where many pending orders have accumulated, you can increase the accuracy of your analysis.

In addition, actual volumes can be tracked through the futures markets. For example, active trading futures contracts for currencies is maintained on the Chicago Mercantile Exchange (CME), which regularly publishes data on trading volumes on its website.

But viewing reports there is not very convenient, so you can use web services that provide data on futures (ClusterDelta, TreadingView), or install one of the terminals for trading futures contracts: Ninja Trading, Thinkorswim, ATAS, MultiCharts, etc. By the way, on The ClusterDelta website has paid technical indicators for Forex that transmit volumes on currency futures from real trading platforms directly to the MetaTrader4 trading terminal.

It is important to understand that technical indicators for Forex are different. Therefore, it is advisable to combine them with each other so that they neutralize each other’s shortcomings. For example, you can take one indicator from the trend group to determine the trend, complement it with a tool to track the strength of the current movement and an oscillator to see where the price is entering the overbought or oversold area.

For example, you can use a combination of a moving average, ADX and, for example, Stochastic. The final choice of indicators depends on the trader himself, but you should not put instruments from the same group on the chart. In addition, you should not get too carried away with adding indicators, so as not to get such a picture where even the price itself is not visible behind the analysis tools.

Important notes on technical analysis

After studying an introductory course on technical indicators for Forex, a trader should understand the following:

1. The price contains everything you need to predict it.
2. There are patterns in the market, and they work well, since history tends to repeat itself.
3. For effective use technical indicators on Forex, you need to control the release of important news.
4. The price always moves within one of 3 trends: upward, downward or sideways.
5. Before trading, you should always plot trend lines, price channels, and support/resistance levels on your chart.
6. Volume analysis tools cannot be used for Forex currency market instruments, since it is simply impossible to obtain them on a decentralized spot.
7. To work, you should choose a candlestick or bar chart.
8. A trader must know all the main trend reversal and continuation patterns, as they are often found on all charts.
9. The moving average is the simplest trend indicator, which is used to eliminate market noise and determine the current direction of the trend.
10. To determine the strength of the trend, as well as critical price deviations, you need to use one of the following tools: MACD, A/D, RSI, ADX, OBV, Stochastic and Aroon.

Results of consideration of technical assistants

Now knowing the main technical indicators for Forex, a trader should begin to master and use them, not forgetting common sense. You should not initially experiment on short time periods, where the accuracy of signals decreases due to the influence of market noise, and, of course, you should not clutter the chart with all the different indicators, making it impossible to track the price.

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As you know, forecasting market movements is based on two main types of analysis - technical and fundamental. In previous lessons we looked at technical analysis, now it’s time for fundamental analysis.

So let's begin. Only a few economic indicators affect the behavior of exchange rates. The rest are more important for economists and for other markets. They to some extent confirm (or do not confirm) possible or already known trends in the economy that do not have a decisive influence on Forex. For this reason, they are simply absorbed by the market in its normal fluctuations. Fundamental analysis examines the state of the economy of certain states and the world as a whole and their mutual influence based on many different reasons and economic indicators. Some economically important events can occur spontaneously; some data are published according to a predetermined schedule by governmental, non-governmental and scientific organizations in most countries of the world.

Fundamental information includes any information that can affect the economy in one way or another. It can be divided into four main groups: economic factors, financial factors, political events and crises.

1. Economic indicators differ from others in that the date of their publication is known in advance, at least for most of the industrialized regions of the world.
2. Political factors can be called quite diverse. Presidential elections are unlikely to shock the market, but, for example, a sharp change in the form of government will be a real shock.
3. Unpredictable factors include financial factors; they have a significant impact on Forex. One of the striking examples is the change in the Central Bank rate of the most authoritative and most developed countries in the world, such as the USA. Surely no one ever knows whether the course of monetary policy will be adjusted or not. There are only assumptions, which, by the way, also greatly influence the market. About 2-3 weeks before the US Federal Reserve meeting, investors begin to show their concern. The real nervous environment in the market occurs when there is a sudden change in the rate, which leads to sharp jumps exchange rates.
4. Crisis events can impact markets. The strength of their influence depends on predictability - which is why, for example, the Gulf crisis had only a limited effect on Forex. However, it happens that even reservations in the speeches of officials lead to significant jumps in the exchange rate. This happened after British Prime Minister Tony Blair spoke on the issue of adopting the Euro instead of the British pound in 2001.

Fundamental Analysis Indicators

Fundamental analysis cannot be imagined without economic indicators, since this is its most important component. As a rule, they are published on days known in advance. For example, in America they are published monthly, with the exception of GDP (Gross Domestic Product) and GDPD (Gross Domestic Product Deflator), which are published every quarter.

Meanwhile, weekly data does not have the desired impact on the market and there is no point in considering it. A trader must know the release date of certain statistics, especially since it is not difficult now. Information on dates, as well as analysis of the influence of these specific indicators, constantly appears in the news feeds of provider companies that provide online trading. Such information can be found from dozens of other sources on the Internet.

The American economy accounts for 20.6% of global GDP, and therefore has the strongest pressure on Forex. To support this statement, we propose to consider the economic indicators of the United States, and by analogy, the indicators of other countries can be assessed, taking into account the impact on the global economy as a whole. Economic indicators consist of two parts, where the first part is the value for the last month, and the second part is updated information for the previous month.

The Gross National Product (GNP) is one of the most basic indicators and is calculated using the following formula:

GNP = C + I + G + T

C is consumer expenditures of the population, which depend on personal income and on the confidence of the country's population in the future. In other words, it is a purely psychological factor that results in the consumer's decision to spend or hold;

I - investment costs;

G is government costs. They have a strong impact on various economic indicators and on the country’s economy as a whole;

T - trade balance of the state (exports minus imports).

GNP data is released every quarter and reflects the total amount of goods and services produced during reporting period American companies at home and abroad. If GNP is higher than forecast, then the dollar exchange rate against other currencies increases, and vice versa.

The Gross Domestic Product (GDP), unlike GNP, it shows the cost of all products and services that were produced only in the United States by domestic and foreign firms. In relation to the American economy, the difference between GDP and GNP is insignificant. But since this indicator is more popular abroad than in the States, it is published here primarily to facilitate comparisons of different economies with the United States.

Inflation Indexes- these are indicators showing trends in rising prices for goods and services. Traders are closely monitoring changes in this indicator. The fact is that the main weapon of the Central Bank in the fight against inflation is to increase the rate of the accounting process, which increases the exchange rate of a particular state. The inflation rate also narrows the discount rate to a more plausible, objective value, which, together with real GDP/GNP data, helps traders and fund managers compare economies different countries to find the best opportunity to make money.

Producer Price Index (PPI) has been published since the beginning of the 20th century and shows average wholesale price changes for raw materials and components at all stages of production. To obtain this indicator, information from many sectors of the economy is processed, which also includes production, extraction of raw materials and agriculture. The dynamics of price changes for approximately 3,400 types of raw materials and goods that were produced directly in America are studied. The most basic product groups include: food - 24%; fuel - 7%; cars - 7%; clothing - 6%. The indicator is published monthly.

Consumer Price Index ( Consumer Price Index (CPI) shows the average change in retail prices in a special consumer basket with a fixed volume of goods and services. The indicator includes data on the cost of food - 19% of the entire index, housing prices - 38%, fuel - 8%, cars - 7%. This list also includes transportation costs, medical services, clothes. Imported goods are also included in this group. Data is published monthly. Both indicators - PPI and CPI - help to better understand the inflationary activity of the economy.

Commodity Index (Commodity Research Bureau's Futures Index (CRB Index)) consists of equally weighted futures prices for 21 types of commodities. These are precious metals (gold, silver, platinum), industrial raw materials (oil, gasoline, diesel fuel, wood, copper, cotton), grains (corn, wheat, soybeans, soybean cake, soybean oil), livestock and meat (cattle, pork peritoneum), import (coffee, cocoa, sugar), miscellaneous (orange juice).

13 out of 21 items are food products, which makes the real picture of overall inflation a little inaccurate. However, this indicator has recently become quite popular among professional traders.

Industrial Price Index (The Journal of Commerce Industrial Price Index (JoC)). The component of this indicator includes prices for 18 industrial goods that are processed in the initial stages industrial production, construction and electricity production. The indicator is one of the most accurate because it is designed for earlier manifestation of inflationary changes. Later they are shown by other inflation indicators.

Balance-of-Payments is the total number of international commercial and financial transactions of a particular state. Analysts assess the importance of this indicator by looking at the country's economy over the long term in terms of its competitiveness, which, in turn, is a derivative of the number natural resources industrial base, professional level of workers in the employment market and labor costs. Limited use of this indicator by traders working on intraday operations has been noticed.

Merchandise Trade Balance- this is the discount between the volume of exports and imports of a country. The indicator is one of the most important economic indicators. It includes such categories of goods as food, raw materials and industrial semi-finished products, consumer goods, cars, large industrial products, etc.

If the indicator diverges significantly from the forecast, the dollar may come under pressure. The US national currency will begin to fall in price if the deficit turns out to be larger than expected, and vice versa.

The USA-Japan Merchandise Trade Balance- This is the trade balance with Japan. The dollar, as a rule, becomes cheaper when the trade deficit with the Japanese partner increases.

Industrial production indicators

Industrial Production Index includes the output volumes of all production, processing enterprises and mines. This indicator plays an important role in fundamental analysis. It shows the real strength of the economy and, through it, the strength of the currency. The indicator increases - the dollar grows. This indicator is published monthly.

Capacity Utilization Index shows the ratio of the total volume of industrial production to the available production capacity. If the economy is developing well, then the ratio should reach 81.5%. An indicator within this framework has virtually no effect on the market. If the specified norm is exceeded, say, up to 85% or more, it can be stated that production is “overheating”. This means that the economy is working as hard as it can. In addition, this may become a kind of signal of the beginning of new inflationary processes. The Central Bank, in turn, may raise the discount rate to avoid inflation or combat it.

National Association of the Purchasing Managers Index (NAPM) calculated based on a survey of 250 managers of the largest industrial enterprises. As a result of the survey, it becomes clear how much the number of new orders, the total volume of production, hiring of labor, the volume of manufactured products in warehouses, and the speed of delivery of products to wholesalers have changed compared to the previous survey. An indicator below 45-50% indicates a deterioration in the economy of a particular state. The indicator was one of the first to be developed, but it is not perfect because it is based more on psychology than on facts, and does not include the largest state of California. In addition, an increase in industrial production does not always mean an increase in demand from consumers. The indicator is used by traders quite rarely (only if the value changes). It can be used to predict short-term movements in the market.

Factory Goods Orders Index reflects the total number of orders for durable, short-term and disposable. This list can include food products, light, simple industrial products, auxiliary products and tools. Its influence on Forex is weak.

Durable Goods Orders Index. This indicator includes orders for goods with a useful life of more than three years. Products are divided into four main categories: metal products (including jewelry), mechanically and electrically driven products and mechanisms, transport vehicles and mechanisms. Orders here are also divided into military and non-military. The index has a significant impact on the market. Durable goods tend to be more expensive, and rising sales reflect increased consumer confidence in the future and increased ability to spend money.
The indicator is growing, and accordingly, the state currency is becoming more expensive.

Construction Index is one of the most important economic indicators and is included as an integral part of GDP. It is worth noting that, starting from the post-war period, it was the construction of houses that helped America emerge from yet another stagnation. The indicator is divided into three categories:

1. construction of new houses and building permits
2. Sales of new and existing single family homes
3. construction costs

The indicator is cyclical and to some extent dependent on the regulator's discount rate. If 1.5-2.0 million new homes are sold per month, this indicates the strength of the economy. When the figure drops to 1 million homes, one can suspect the beginning of a recession in the country. Most often, the indicator is used to obtain an overall picture of the economic situation.

Employment Indicators reflect the unemployment rate in the country. They play an important role in assessing the economic condition of a particular state as a whole. In addition, they are used as a component for other indicators.

Unemployment Rate always presented as a percentage. The indicator consists of two components:

1. The Business Firms (Establishments) Survey, which, in turn, consists of the following parts:
   1. Payroll - salary
   2. Workweek - average number of working hours per week
   3. Hourly earnings - average hourly salary
   4. Total hours of employment in the non-farm sector - the number of working hours in the government, in the manufacturing sector, in the service sector, in construction, in mines, in retail trade, etc.
2. The Household Survey consists of:
   1. Unemployment rate - unemployment rate as a percentage
   2. The overall labor force - the total volume of productive labor force
   3. Number of people employed - number of people of working age without work

Traders need to pay increased attention to monthly indicators that show how strong the economy is and what state it is currently in - this could be growth or recession. Among the indicators reflecting the real picture on the labor market, the unemployment rate is the last to improve. Therefore, if unemployment decreases, then the country’s national currency, as a rule, goes up, and vice versa.

Retail Sales level plays an important role in Forex. It shows the intensity of consumer demand and buyer confidence in the future, which affects the strength of the country's currency. If a person has enough money to make a lot of purchases, this, in turn, will have a positive effect on the volume of manufactured and imported products. The indicator is dependent on the seasonal factor. The most important months are September and December, when children get ready for school and Christmas gifts are given. As the indicator grows, the currency becomes more expensive accordingly.

Consumer Sentiment Index- survey of property owners. It is designed to find out the spending intentions of the middle class. Calculated by Michigan State University and National Family Opinion for the Conference Board. Limited impact on Forex.

Auto Sales Index reflects the volume of car sales. It is important for the economy as a whole, but is used extremely rarely in forecasting.

Leading Indicators. The composition includes the following economic indicators:

• - Average workweek of production workers in manufacturing - average number of working hours per week of industrial employees
• - Average weekly claims for state unemployment - the average number of people applying for unemployment benefits in each state each week
• - New orders for consumer goods and materials - new orders in companies engaged in the production of consumer goods and materials
• - Vendor performance (companies receiving slower deliveries from suppliers) - the efficiency of vendors, which primarily depends on the speed of delivery of goods
• - Contract and orders for plant and equipment - the number of new contracts and orders for the production of equipment and for entire enterprises
• - New building permits issued - number of new permits for building houses
• - Change in manufacturers" unfilled orders, durable goods - changes in the production speed of orders that have not yet been completed, but have already been paid for. This also includes durable goods
• - Change in sensitive materials prices shows the change in cost for highly sensitive materials
• - Index of stock prices - stock indices (Dow, NASDAQ, S&P500, Russell 2000 etc.)
• - Money supply, adjusted for inflation - the volume of funds in circulation in terms of inflation
• - Index of consumer expectations demonstrates expectations from buyers

Market analysis using financial, social, political factors

Using these indicators, it is possible to predict economic development 6 to 9 months in advance.

Financial factors

Financial factors exert significant pressure on exchange rates. The most influential is considered to be the interest rate of the country's Central Bank - Interest Rates. Most experts are confident that the indicator is paramount in determining the value of one currency in relation to another. However, it would be a mistake to think that if this percentage increases, the value of the local currency will always increase. There are many other factors in trading that we will now consider.

Financial factors play a key role in fundamental analysis. Changes in the course of monetary or tax policy are carried out in order to achieve the desired results in the country's economy. What is happening, naturally, cannot but affect exchange rates. There are situations when the government needs to intervene in international affairs to fulfill the various obligations that the United States or, more often, the European Economic Community has to the world community. The lever for such intervention is usually financial factors. The country's Central Bank is in charge of this entire process. In America, for example, this is the Federal Reserve Bank. So, Federal Reserve Bank(FRB) plays a primary role in determining the value of the “American” in relation to other world currencies. How does the Federal Reserve Bank determine its monetary policy, what goals he pursues and what levers he uses, we will now find out.

Federal Reserve Bank - Federal Reserve Bank of the United States

The Federal Reserve Bank can have a significant impact on the country's economy through Key Interest Rates. These are the key, main rates of discount interest, or the interest at which the Federal Reserve lends money to commercial banks to replenish their reserves, and at which they also lend money for one day to other financial institutions. The percentage we are considering is called the Overnight Federal Funds Rate. Through it, the Federal Reserve Bank can indirectly influence the slowdown or acceleration of the pace of economic development and the reduction of inflationary processes. Now we propose to analyze the financial factors that most strongly influence currency exchange rates. So these are Money Supply and Interest Rates.

Money Supply is the volume of funds in circulation. Consists of:

1. M1 - the amount of coins and banknotes circulating outside banks
2. M2 - funds in bank savings accounts
3. M3 - various banking financial instruments

Information about Money Supply in America is published every Thursday.

Interest Rates is the percentage of the regulator’s rate at which it lends commercial banks. The indicator is of great value in determining the exchange rate. Fundamental analysis begins with monitoring Interest Rates. The process is not easy, so the Central Bank is very reluctant to adjust the discount rate and does not do it often, say, once every few years. However, the rate change interval depends largely not on the desire of the regulator, but on the economic situation in the country.

It is important to know: the higher the interest rate, the stronger the country’s currency. Since the currency exchange rate always involves the currencies of two countries, traders also need to keep in mind the ratio of interest rates of these countries - Interest Rate Differential. This is also one of the key factors. You need to monitor not only the change in the interest rate of one of the countries.

Traders’ attitude to Interest Rates is the same as to other indicators, that is, first they trade based on rumors and assumptions and only then look at the real picture, in our case, facts. In this regard, the expected and predicted change in the discount rate that occurred during the next meeting of the Central Bank is often already discounted by the market, and the situation on it remains neutral.

If interest rate was not adjusted according to economic reasons, and politically, the market may go against the regulator, relying in its calculations on fundamental analysis. What is important here is not only the fact of the rate change, but also how much it was moved compared to the expected value and how this will help the economy.

Social and political factors

Now let's look at the influence of political factors on the global currency exchange market. Events that are known in advance, such as presidential elections, are quite predictable. As a rule, at this time there is a short-term depreciation of the currency (in relation to the United States). In European countries everything is different. If socialist parties come to power in a certain region, which business traditionally does not support, then the value of the national currency often decreases against the dollar, but not for long. If those whom business supports and with whom certain hopes are pinned on improving the economic condition of the state win, the exchange rate increases.

This was the case before the advent of the euro. Nowadays socialists are in power in the governments of many European countries. European Central Bank(ECB) is headed by Mario Draghi, who replaced Jean-Claude Trichet in this post. Regardless of who is at the helm of the regulator, the ECB's main goal remains maintaining price stability in the eurozone. The inflation threat is considered extremely dangerous. The increase in the Harmonized Consumer Price Index in the European bloc should not exceed 2%.

In the world, in addition to predictable events, sudden ones also happen that cannot be predicted. The latter include wars, military coups, assassinations of political figures, etc.

In a stressful situation, investors use tools called “safe heaven”. In recent decades, these included the American dollar and Swiss franc. The exchange rates of these currencies begin to rise in price relative to others, as they begin to be bought up sharply in times of crisis. Here you should not exclude another safe asset from your accounts - gold. It must be said that, for example, the British pound can act as a safe heaven. If, for certain reasons, instability is rapidly gaining momentum in areas of Southeast Asia, say, there is a threat of war from North Korea, or in the Middle East, where in the event of war, production and supply of oil to the world market usually falls, then we should expect rapid depreciation of the Japanese yen.

If oil prices rise in the world, then the British pound, accordingly, goes up, because British economy depends on the export of oil it produces in the North Sea. In principle, if prices in commodity markets where various raw materials are sold increase, then the currencies of countries whose economies depend on the export of these goods also rise in price. As an example, we can name countries such as Canada, Norway, Finland. Since raw material prices are quoted in US dollars, as raw material prices rise, the US currency also becomes more expensive.

Fundamental analysis must take into account a fairly large number of different factors; this is a whole science. However, factors clearly expressed in fundamental analysis do not always have an immediate effect on the market. Sometimes you need to wait a few days or even months. If during this time you have not been able to form an opinion about the situation on the market, then it is better not to trade. Here, the right decision would be to wait until the market itself, namely its behavior, gives you clearer signals about the direction of its movement.

Click on and you will go to the page economic calendar, which contains a description, approximate time and day of publication of macroeconomic indicators.

Test questions.

Technical analysis indicators play a fairly important role in the work of a modern trader. The very purpose of indicators is to simplify as much as possible the analysis of the huge amount of information presented on price charts. Therefore, now it is hardly possible to find a trader who has not heard of such a concept as technical analysis indicators.

Thanks to the use of computers, the use of indicators has been simplified as much as possible for modern traders. In order to attach one or another of them to the chart of any financial instrument, just press a couple of buttons on the control panel of the trading terminal. The terminal will automatically calculate all parameters (according to the specified settings) and display a convenient and easy-to-read indicator chart.

A trader only needs to know how to correctly interpret the readings of a chart issued in this way in order to isolate reliable ones from them. trading signals for the purchase or sale of the financial instrument in question.

Below are the most popular (and therefore present in the tools of almost every trading terminal) existing indicators.

This is perhaps the most popular indicator of all existing ones. The moving average is designed to smooth out the price chart and identify the main trends on it. It is calculated in such a way that each point provides information on prices for a certain period of time. This period of time is called the moving average period.

Price chart with moving average

That is, at each point of the moving average, the average price is calculated for the time interval specified in its settings. The longer this interval (period), the smoother the moving average and the less it reacts to small, insignificant price movements. On the contrary, as the period decreases, the moving average becomes more and more sensitive to each next surge (or trough) on the price chart.

The MA period is selected in such a way that, on the one hand, random fluctuations (volatility) of the price chart are ignored, and on the other hand, truly important price changes are not missed.

The simplest interpretation of the readings of this indicator comes down to analyzing its intersections with the price chart. If the price crosses the moving one from bottom to top, then this is a signal to buy. On the contrary, when crossing from top to bottom (the price crosses the moving average from top to bottom), we are talking about a signal to sell.

There are several types of moving averages:

1. Simple Moving Average (SMA)
2. Weighted Moving Average (WMA)
3. Exponential Moving Average (EMA)
4. Modified Moving Average (MMA)

As practice shows, the best results are shown by the simple moving average (SMA).

MACD

A very popular technical analysis indicator based on the convergence and divergence of two moving averages with different periods. There are two options for presenting this indicator: linear and histogram. A linear representation in the form of two lines - “fast” and “slow”, and a histogram in the form of columns showing the distance between these two lines at each moment in time.

Price chart and MACD indicator

MACD abbreviation from EnglishMovingAverageConvergence/Divergence, which literally means the convergence and divergence of MA (moving averages) was developed by the founder investment company Signalert Corporation by Gerald Appel and was intended to analyze the strength and direction of the trend, and in addition, to identify turning points on the price chart.

A signal to buy is the intersection of the fast line with a slow one from bottom to top, and a signal to sell is a similar intersection from top to bottom (that is, when the fast line crosses the slow line from top to bottom).

MACD divergence (divergence between the indicator chart and the price chart) is considered a fairly strong signal. Good results are obtained by using MACD during sideways market movement (flat) and on large time frames (weeks, months). On small timeframes this indicator gives too many false signals.

Read more about the use of this indicator, as well as its main advantages and disadvantages.

Due to its simplicity and ease of interpretation, the momentum indicator has become widely used among traders. Momentum is calculated as the difference between the current price of the financial instrument in question and the price of the former price a certain period of time ago. This period of time is called the period of the momentum indicator. In fact, momentum is equal to the profit (or loss) received over a given period of time for the purchase of one unit of the financial instrument in question.

Momentum indicator on the price chart

Technically, this indicator shows the presence or absence of a trend, as well as the direction of this trend. Positive values ​​of the indicator indicate an upward trend, negative values ​​indicate a downward trend. A change in the indicator sign indicates a change in trend.

The main signals of this indicator are when it crosses the zero mark. That is, when momentum changes its sign, thereby indicating a change in the prevailing at the moment trend time. When the sign changes from plus to minus (the trend changes from upward to downward) it is a signal to sell, and when, on the contrary, from minus to plus (the trend changes from downward to upward) it is a signal to buy.

Learn more about the momentum indicator.

RSI (relative strength index) literally translated from English means relative strength index. The popularity of this indicator is due to the ease of its interpretation. Using RSI, traders assess the strength of a trend, as well as the likelihood of it changing.

One of the strongest signals given by this indicator is divergence. Divergence is the discrepancy between the price chart and the indicator chart. In other words, if a new extremum forms on the price chart, but this extremum does not appear on the RSI chart, then this indicates a high probability of a trend change.

RSI on the price chart

The Volume indicator, unlike the above technical analysis indicators, does not give signals to buy or sell. It is an auxiliary tool and helps to assess the strength of a particular trend.

Volume is translated from English as volume. And this indicator shows, respectively, the volumes of transactions completed in each individual period of time**. The more volume a trend is supported by, the greater the strength and likelihood of its continuation.

Price chart with Volume indicator

In particular, the Volume indicator is used to confirm technical analysis patterns. For example, when the well-known “head and shoulders” pattern is formed, an increase in volume in areas of falling prices and a decrease in volume in areas of growth is a powerful signal confirming the truth of this figure.

This indicator is also well used to establish the truth of a level breakdown. If the breakout is accompanied by an increase in Volume, then this indicates its truth, and conversely, a decrease in volume after the breakout indicates that the breakout is most likely false.

** For the Forex market, the Volume indicator does not show the volume of transactions, but the number of ticks of price change. Therefore on foreign exchange market it is often called tick volume.

Technical analysis indicators appeared quite a long time ago, and many of them were used even before general computerization. For example, the well-known Ichimoku was developed in Japan in the 30s of the twentieth century. Naturally, at that time there was no talk of automatic calculations. Therefore, work with the indicator was carried out exclusively manually.

Technical analysis indicators are algorithms that allow you to obtain data on future prices using quote data over a certain period of time.

Each technical analysis indicator is based on a certain formula. It is with its help that the calculation takes place. Depending on the type of indicator or its purpose, the formula may vary. For example, one calculates average prices for a certain period, the other calculates closing or opening prices of the market, and so on.

With the advent of computers and large-scale computerization, indicators gradually migrated to computers. Now all calculations are carried out automatically, which has greatly simplified the trader’s work.

Technical analysis indicators are very popular among traders. This is partly due to the fact that all the calculations are done by a machine. The trader receives only the result, which he puts into practice. The result of the work of most indicators (precisely most, but not all) is the receipt of a specific signal for action - buying or selling an asset.

The basis of how indicators work

Oscillators become useless during trending periods. Accordingly, it is necessary to use some kind of tool in order to understand when work in the range ends and trading within the trend begins. (Gator Oscillator)
(Market Facilitation Index, MFI)

How to work with indicators

Technical analysis indicators are necessary mainly for short-term traders who prefer to work in a short time frame. Investors who trade long-term are not interested in using technical algorithms, as they prefer fundamental analysis.

On our website you can connect different indicators and see how they work, but brokers, of course, have trading terminals more possibilities, including a larger set of indicators, as well as the ability to connect third-party, new indicators.

In order to start using this or that indicator, you must, at a minimum, study information about it and understand how its formula works. This is very important, as it will allow you to determine in the future in which situations it is worth considering the indicator signals, and when it is better to abstain.

Most indicators can be customized independently to suit your preferences, for example, change the indicators of intervals and periods. As a result of such manipulations, it is possible to significantly change the indicator readings, making it more or less sensitive.

There are no ideal settings, so the trader will have to adapt to a specific situation. In general, they work great on the default settings, and if you want to change settings created by professionals, you must understand exactly what you are doing.

Technical analysis indicators have long become an integral part of it. They form the basis not only of manual strategies, but also automatic advisors. Not a single deal on professional market cannot do without technical analysis and indicators.

Technical analysis indicators provide many possibilities, but it is important to remember the successful component - always combine different indicators to obtain the most reliable signal.

If one indicator tells you about a trend reversal, that’s good, but when 2 more indicators tell you about it, that’s even better.

If you find an error, please highlight a piece of text and click Ctrl+Enter.

Fundamental analysis in Forex seems simple only at first glance. For many novice traders, it seems like the grail. It seems logical, for example, that the release of positive statistics on the US labor market should push the dollar up. Why not? This suggests that the economy is growing, which means the price of the American currency is also growing.

When the market turns down, it discourages anyone from delving into trading. “The broker draws the price, all this trading is a scam” - this is what novice traders think, trapped in their own inexperience. And the following could happen:

• the statistical data were obvious and by the time of publication they were already included in the price. And any other factor could lead to a price drop;
• investors expected much stronger results and were disappointed;
• another fundamental factor turned out to be stronger.

Despite the fact that it is not recommended to trade with intraday strategies at the time of news release, we will still risk offering you a strategy that combines Forex fundamental analysis and technical analysis.

Fundamental analysis on Forex and “Bulls & Bears”

This strategy uses two indicators - oscillators. They allow you to catch a correction after a strong price surge. After the release of reports, the trend immediately enters the volatility stage. After the main trend is caught, the price appears to have correction areas and inertia. Auxiliary indicator - Bollinger Bands.

Trading conditions:

• Timeframe - 15 minutes.
• Currency pairs - any, depending on what news (reporting) is published.
• Bulls settings: Period = 13, Levels 0.004 and -0.004.
• Bears settings: Period = 13, Levels 0.004 and -0.004.
• BB indicator settings: Period = 40, Shift = 0, Deviation = 2, Apply = Close.

Conditions for opening positions:

• We trade only at the most important news(an economic calendar will help).
• One of the oscillators drew a pattern: on the first candle there is a relatively large column in absolute value (compared to the previous one). The next column is the same in modulus, but in the opposite direction.

The trade is opened on the next candle in the direction opposite the news candle. If it falls, we open a long position; if it rises, we open a short position. We close the deal when the correction candle reaches the middle of the news candle. Opening example long position on the screen: