Bollinger Bands When Trading Forex
The Bollinger bands can provide an easy framework for price trend verification and trading signal generation.
Bollinger Bands at a Glance
The Bollinger Bands developed by John Bollinger is a technical analysis tool for measuring price volatility, evaluating price trend and generating trading signals, all in a fully visualized approach.
Bollinger Bands Explained
The tool is usually used by day-traders and works best when it is applied in 1-hour charts. The Bollinger bands can be used for trading any financial market or asset and can generate tens of daily signals (standard settings 20,2). When the price of an asset crosses above the upper or below the lower band then the price trend is likely to pause or reverse. The Bollinger Bands offer also traders a quick map of price volatility.
The tool consist 3 parts, two bands and a curve:
(1) Upper Band (standard deviation)
(2) Lower Band (standard deviation)
(3) Middle Curve (moving average line)
The two bands (upper and lower) represent the readings of a standard deviation and therefore consists a statistical measure. The middle curve is a moving average (in standard settings it is a 20-period moving average). In general, when the price of an asset moves outside outer bands (higher or lower) then it will likely retrace back to at least to reach the central Bollinger Curve.
Ichimoku Kinko Hyo (一目均衡表) Indicator
The Ichimoku Kinko Hyo is a popular trading indicator that was created by a Japanese journalist, Goichi Hosoda, and his team.
The system was released in late 1960 after more than 20 years of development and testing. Today Ichimoku Kinko Hyo is considered on of the top Forex trading indicators which can also be applied to equities, futures and other types of financial instruments. Ichimoku Kinko Hyo means 'Quick Equilibrium Chart' and it is able to provide traders a complete picture of the current market conditions, in just a glance. Ichimoku Kinko Hyo is a relatively complex tool but it offers some unique trading characteristics, for example identifying instantly strong trends and reversals.
How Ichimoku Kinko Hyo Works?
The Ichimoku indicator is based on the combination of different moving averages aiming to identify the master trend. The lines of moving averages incurred in an Ichimoku chart are calculated and plotted using the ½ point of highs and lows as it is described below.