Forex Trading Strategy Using Momentum Indicator - Forex Trading Strategy - Florida 2024

In technical analysis trading, there is a term called "momentum" which refers to the strength behind a trend. Momentum indicators are classified as oscillators. It is designed to identify the strength of the movement of a market price. So this can help us to assess the level of price fluctuations for a certain period and determine the critical conditions that can be used for opening positions.

Main Trading Techniques Momentum Indicator

Which is a signal that the current trend will continue i.e., the appearance of extreme values on the chart consisting of 100 and more candles. But even so, before we open any position, we need to look for confirmation from other indicators. This is to convince us to take action.

The trading tactics using the Momentum indicator are based on the signals we receive when the line crosses the 0-100 level. If you want to determine the most relevant important moments, we recommend setting up a fast-moving average with a candle period of 5 - 10.

Signal For Purchase

The signal to buy occurs when the moving average crosses the 100 level from bottom to top.

Signal To Sell

While the signal to sell occurs when the moving average crosses the 100 lines from top to bottom. This technique will be even more accurate when combined with trading signals forex.

We need to know that momentum indicators are usually used to break through trading channels. This means that if there is a high (positive) value momentum and the current price is higher than the previous trend and an uptrend will appear then is the right time to buy. As for the selling conditions, there must be a low (negative) value momentum and the current price must go down (there must be a bearish trend).

Main Weaknesses Of The Momentum Indicator

The downside of the momentum indicator that we must know is an immediate reaction of the indicator in the event of a false breakout - price bounces occur due to speculative trading.