Thursday, January 30, 2014

Swing trading the Forex

Traders can use the EMA indicator in the Forex market.
The exponential moving average EMA and the MACD Moving Average Convergence/Divergence are watched by forex traders to determine the trend of the market.We presently are using a EMA of (20) and (10) as the chart settings for the forex market.We also have been using EMA 9 and 30 to indicate the price move for scalping the forex market but you need a good strong trend for this type of trading.You wait for the cross to happen and the candle close below or above the EMA to place your trade.The EMA puts more weight on recent FX price action.
The Macd proves most effective in wide-swinging trading markets with a good trend. Good charting software will have the EMA and the MACD indicators built into there charting software.
An indication that an end to the current trend may be near occurs when the indicator divergesand you see a cross of the trend lines. A bearish divergence occurs when it is making new lows while prices fail to reach new lows. A bullish divergence occurs when it is making new highs while prices fail to reach new highs. Both of these divergences are most significant when they occur at relatively overbought and oversold levels.
Most trader use candle stick charts to trade the forex market and these two chart indicators. Traders can use both candle stick charting and tick charts when trading the forex market.
When using the MACD indicator you watch for a cross of the 0 line to indicate a new trend might be developing. Macd Crossovers are used to trigger a buy signal or sell signal when the indicator falls below its 0 line. Similarly, a buy signal occurs when it rises above it's signal line. It is also popular to buy/sell when it goes above/below zero.
FX EMA Chart