The Best Technical Indicators for the Options Market

The Best Technical Indicators for the Options Market

  03 Nov 2020

Foreign currency exchange (Forex) is a market where people can buy one currency against another and sell them to earn profits. Since this market is highly volatile, nobody can predict the upcoming condition. This is why the experts have developed many indicators that can identify the movement of the trend, entry, or exit points to make it easier for the traders in Singapore to earn money. They are called technical indicators because they analyze the graphs to generate a more accurate situation of the market. However, it should be remembered that these analyzing tools will never provide you with 100% accurate information in every trade.

Here are the best technical tools that analyze the market deeply and reveal the upcoming situation.

Best technical indicators in Forex

1.      Trend indicators

Trend indicators will analyze the graph and will draw a trendline to realize the pattern. The tools are –

        i.            ADX (average directional movement index)

This technical tool will reveal the strength of a direction, and the software will develop it based on the EMA (exponential moving average) of the two different indicators. There are two directional movements – +DI and -DI, and the values will reveal the highs and lows of the graph. The +DI will indicate the strength of an upward trend, while the -DI will reveal the strength of a downward trend. The ADX will take the value of +DI and -DI and will reveal which trend is stronger.

      ii.            Aroon

This tool firstly identifies whether there are any sharp direction or not. If it identifies a trend, it will measure the strength and how the trend is developing. This software will play with the conception and measure the trend by determining the recentness of the last higher highs and lower lows. Try to use the Aroon oscillator in higher time frame to get better result. And trade with Saxo Forex broker to get the best result.

    iii.            Moving average divergence/convergence (MADC)

It will reveal the changes in the direction, momentum, and strength of the trend. It uses the moving averages from different periods with a few interesting changes. The platform will reveal another display that will have a reference level of 0. This histogram will help a trader identify the trades when there is a divergence.

2.      Momentum indicators

The momentum analysis tool is regarded as one of the best theories because professionals state that momentum indicators can produce a better result.

        i.            Relative strength index

This is the first category of the momentum indicators, and it will help you deal with the basic graph issues. By using the RSI, an investor will easily know whether a currency is oversold or overbought. The indicator will measure both the magnitude and the velocity of the price to reveal the condition.

Basically, momentum is the rate of changes in price. This RSI will compare the ending prices of the existing and the earlier candles for the down or up trends. Finally, it will reveal the final result by calculating the relationship between the uptrend EMA and the downtrend EMA.

      ii.            Stochastic oscillator

Technical indicators that fluctuate ups and downs oscillate when set on a scale. The stochastic oscillator is similar to the other tools, which helps to determine the oversold and overbought areas by calculating the momentum.

During the bullish movement, the price may start falling once it touches the peak value, and during the downward movement, the price will start going up after touching the bottom value. Stochastic is plotted in the 0 to 100 scale, and it has the oversold/overbought threshold of 20/80.

These are regarded as one of the best technical indicators to analyze the market and the graph. In addition to this, there is another elite trading platform named MetaTrader 4, which offers a wide range of benefits. There are more tools, and the Forex traders can use to predict the upcoming market condition.