When we talking about technical analysis we are basically referring to studying historical stock market patterns in order to look at possible market movements and predict evolution thanks to charts and graphics. A graphic chart is going to help the investor to guess which way the forex market will go and any indication of stocks future performance will enable him to gain profits in the market. When using technical analysis we will only use the past records that we see in a stock statistic, like volume and prices. There is no attempt to try to determine the stock’s intrinsic value.
1.Take profit price should be some important price level on forex chart as Fib. level, daily low or high etc.
2.Daily average true range ATR can be nice tool to show you where your target should be.
Find target using ATR:
When you take profit video lesson: Forex Strategy Video: When to Take Profit
Except important price level I like to use one oscilator as additional indicator. Here are list of most famous indicators:
Technical Analysis Forex Indicators
Bollinger Bands – Such an indicator will show stock volatility and stands out as the most popular technical analysis technique used today. It is made out of 3 bands. The middle band is just an average while the below and above bands are 2 standard derivations obtained from the simple middle moving average. A Bollinger band will adjust itself as the market moves. Standard deviation thus becomes a volatility indicator. All bands will expand as the volatility rises and then contract when the volatility will decrease. Bands contracting basically mean that volatility is to rise sharply in the future. When the prices will move close to an upper band we will soon see the market being overbought. When the prices move down towards the low band we will soon see the market being oversold.
Stochastic Oscillator – A Stochastic oscillator will compare the price range of a stock with its closing price for a specific period. You can adjust the time frame or the moving average can be eliminated so that the indicator shows a reduced sensitivity when faced with market movements. Such a technical indicator will be based on the main principle that a stock price will close near a high value when faced with an upward market and near a low value when the market shows a downward trend.
RSI (Relative Strength Index) – This is one technical momentum indicator that helps in determining whether one asset is oversold or overbought by comparing recent gains magnitude with recent losses. RSI shows a range situated between 0 and 100. If we see that RSI is 70 then the asset we analyze is overbought and will soon be overvalued. When the RSI is 30 the exact opposite happens. Keep in mind that RSI can show false sell and buy signals if the price of the asset moves too low or too high. It is always recommended to use this technical indicator in a combination with other different stock selection techniques.