Traders use support and resistance to define psychological levels inside the Forex trading market. As we know that psychological market price change the market trends and make swing movements. In other words psychological levels are connected with support and resistance.
Bollinger bands is one of the most traded forex technical indicator which can define support and resistance levels trough the bands. Bollinger bands indicator mad by John Bollinger, he is a professional trader and very successful. In 1980 he made this trend indicator and now 50% of experienced traders around the world use his technical indicator. In Forex market, Bollinger bands is used to define current trend and support resistance levels.
These bollinger bands indicator is consist with 3 bands, upper band, lower band and the middle band. The middle band actually is SMA indicator, generally traders use the middle band to define current trend of the market price. When the market price moves above the middle band, then we can assume the market is in bullish trend and when the market price moves below the middle band then we can assume the market is in bearish trend. How about lower and upper bands? Upper band is represent resistance and the lower band represent support.
Generally traders use Bollinger bands is to determine the volatility of the market price. The market price moves range between the upper and the lower band. This indicator will be widen if the market price is active and bollinger bands will be narrowed if the market price is calm.
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