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Forex Trading Session 4

Forex Trading Session 4. Technical Analysis. Introduction .

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Forex Trading Session 4

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  1. Forex Trading Session 4 Technical Analysis Hands-on Forex trading

  2. Introduction • What Does Technical Analysis Mean?A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. • Investopedia explains Technical AnalysisTechnical analysts believe that the historical performance of stocks and markets are indications of future performance. In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, his or her decision would be based on the patterns or activity of people going into each store. Hands-on Forex trading

  3. Agenda • Bollinger Bands • RSI • MACD • Candlesticks Hands-on Forex trading

  4. Overview • We are here to determine if we can make money on the Forex market using technical analysis • We will find out what some of these technical tools help us predict and employ them in a trading environment • Draw our own conclusion if this is for us or someone else Hands-on Forex trading

  5. Bollinger Bands • What Does Bollinger Band Mean?A band plotted two standard deviations away from a simple moving average.. Hands-on Forex trading

  6. RSI –Relative Strength Index • What Does Relative Strength Index - RSI Mean?A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. It is calculated using the following formula: • RSI = 100 / (1 + D(P,n)/U(P,n)) U(P,n) - is a moving average of growing of the P price within n periods, D(P,n) - is a moving average of falling of the P price within n periods. Hands-on Forex trading

  7. As you can see from the chart above, the RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it is an indication that the asset may be getting oversold and therefore likely to become undervalued. • A trader using RSI should be aware that large surges and drops in the price of an asset will affect the RSI by creating false buy or sell signals. The RSI is best used as a valuable complement to other tools. Hands-on Forex trading

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