mt4 Forex indicator showing the oversold and overbought areas
technical analysis and Indicators
now remember technical analysis is a very broad term it this covers everything from looking at a price chart to putting levels of support and resistance or looking at triangles on a chart pattern or using oscillators and indicators or using things like trend lines but any anytime you use a chart and anything you put on your chart is the field of technical analysis and in that field one of those sectors are technical indicators and some of those indicators are oscillators oscillators are one of the most interesting grouping of technical indicators they are designed to signal overbought and oversold levels
oscillators are a family of indicators that go beyond the mathematics they focus on one important thing and that is momentum or more specifically changing momentum so before we delve into oscillators or how best to use them let me save you some unnecessary pain let me tell you first what oscillators aren’t some traders believe that oscillators are some sort of magical index but they’re not rest assured when i tell you that they are not oscillators main use is not to tell you whether to buy or sell they’re not going to tell you whether you’re going to make money they’re not going to help you get rich rather they alert you to when it might be a good time to execute a buy or a sell strategy now that is a very big difference they’re alerts they give you a piece of information about what might be happening those who attempt to use oscillators as an ultimate buy or sell signal should be ready to learn a tough lesson that will use them to fine-tune their timing however will find that oscillators are a very powerful tool
now indicators are the most useful tool of all technical analysis visual aid they define precise moments to sell or to buy in finance technical analysis a lot has a lot of different indicators and they’re used most of them in many different ways
How It Works:
A simple and effective indicator consisting of level 70 to generate a sell signal and level 30 to generate a buy signal, as it shows areas close to the end of the movement and direction of the market, by forming areas of buying saturation and selling saturation, and it can be used as an aid in executing trading operations.
How to trade with the Indicator:
The price cannot move in one direction forever, as currency pairs that are overbought or oversold have a greater chance of reversing the trend, and at times may remain in overbought or oversold for a long time.
When the indicator line drops below the 30 level, the indicator creates a green area warning of a buy signal.
When the indicator line rises above the 70 level, the indicator forms a red area warning of the presence of a sell signal.
Buy positions are closed as soon as the indicator line turns red, and short positions are closed as soon as the indicator turns green.