The choice of technical tools to predict the fluctuation prices is a crucial factor influencing your trade income. There are a lot of factors that have an influence on this, which makes it next to impossible to predict an option. That is why all trading periods are subdivided into equal timeframes. Here are five important criteria to be taken into account:
- Tender opening
- Close of trading
- Minimum period
- Maximum period
The market of online trading is always moving up or down according to a realm of external tendencies. Sometimes you can see the flat condition of the dynamics curve. In this case, the index stays unchanged. Take a closer look at the tools that will help you with analysis.
Top 6 Technical Analysis Tools
- Moving Averages. It is the most common tool to trace stock prices. You can see the movement of trends for 10, 50, or 200 days’ period. The general principle of averages is simple. If the precise tendencies are above the moving line, it is time to buy currency. If your curve moves downwards, you should either sell stocks and money or wait for changes.
- MACD. This one is also a popular and important tool widely used by traders. Moving average convergence/divergence comprises two lines on the diagram. The blue one is fast, and the brown line is slow. Buy currency as soon as the blue line crosses the brown one.
- On-balance volume indicator. The tool measures positive and negative changes of the chart with reference to the price for the latest timeframes. If the index grows, the indicator follows it and vice versa.
- ADX. The tool was created to become a signal of the market in a strong trend. When the ADX is more than 40, it means that the graphic has a lot of directional strength. If it is less than 20, the market signals about its non-trending state.
- Relative strength index. Due to the signals of this index fluctuations, you are able to see the conditions of security dealing. Zero contributes to an oversold stock’s state, while a hundred shows an overbought condition. The chart helps you to learn whether the currency is bought or sold.
- Fibonacci Retracement. The basic strategy of using this method is to predict the market’s trends according to a few percentage indexes. 38.2%, 50%, and 61.8% are the most well-known of them. Plot the signal from top price, and the program will provide you with a retracement level; for instance, 32.8% means that the level is stable and you can buy securities, and so on.
You may ask why it is so important to identify market statistics and tendencies. In fact, it is quite easy to trace ups and downs of the diagram. But it is difficult to understand if the position is a signal to buy or sell and whether you can gain some profit out of it. You may also look for some news related to the market to see whether it is possible to benefit from the situation.
The main goal of every trader is to predict the market trends for the sake of financial gains. The discussed tools are efficient market indicators to help you cope with the chart’s tendencies and make a fortune. Good luck!