1. Moving Average (MA)
Refers to trend indicators. The Moving Average indicator or moving average shows the average price of a currency pair over a certain period of time. The MA helps smooth out the noise in the chart, offering a clear view of the immediate direction of the market.
2. MACD (Moving Average Convergence Divergence)
MACD is an important trend indicator and is used to identify buy or sell signals. This indicator tracks the difference between two moving averages, usually the 26-day and 12-day averages.
3. Relative Strength Index (RSI)
RSI is an indicator that is used to study the speed and changes of prices. This helps determine whether a currency pair is in an oversold or overbought zone. This indicator is often used by traders to identify possible trend reversal points.
4. Bollinger Bands
Bollinger Bands consist of three lines: one simple moving average (SMA) and two splines drawn at a given standard deviation from that average. The lines form a channel around the price. When the market becomes more volatile, the bands widen, and they narrow during periods of less volatility.
5. Stochastic Oscillator
The statistical oscillator helps determine when a currency pair is overbought or oversold. Unlike RSI, which uses price closes and overall average range closes, the stochastic oscillator uses high and low prices to determine its relative strength.
It is important to remember that no indicator works perfectly one on one all the time. Successful Forex trading often involves using several indicators together to get the best picture. It is good practice to combine different types of indicators to get the most complete picture of what is happening in the market.