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In earlier posts is the ADX/DMI, MACD/DMI, Bollinger Bands and stochastic illustrated.
Purpose of this post
In this post is the purpose to analyzing the EUR/USD with the four indicators. The purpose is to illustrate the thought in using the indicators.
How to analysis with the ADX/DMI, MACD/DMI, Bollinger Bands and Stochastic?
The chart is the EUR/USD and illustrates the price chart in the morning: from 7:15 until 9:15 is the price falling; at 9:15 is the price starting to increase.
Between 9:15 and 9:30 is an indication that the price is starting to move in an upper direction; the lower Bollinger band and the price line are crossing each other and the stochastic is indicating that the EUR/USD is oversold.
Between 10:30 and 10:45 is the upper band crossing the price line and the stochastic is indicating that the EUR/USD is overbought.
ADX/DMI: How strong is the trend?
Between 9:15 and 9:50 is the red line above the green line; it indicates that the trend is negative.
At 9:50 is the green line crossing the red line; it indicates that the trend is positive and the price is increasing.
MACD/DMI: How likely is the trend?
Between 9:15 and 9:50 is the blue line above the green line; it indicates that the trend is unlikely. The histogram confirms the indication.
At 9:50 is the green line crossing the blue line; it indicates that the trend is likely and the price is increasing. The histogram confirms the indication.
When to buy?
The Bollinger bands and the stochastic indicate that the buy signal is between 9:15 and 9:30 as the lower band cross the price line and the stochastic indicates that the EUR/USD is oversold.
The ADX/DMI and MACD/DMI indicates that the buy signal is at 9:50 .
The entry in the market would be at 9:50 as the ADX/DMI and MACD/DMI indicate a likely trend.
At the same time period is the stochastic in an overbought zone; which would have been a signal that the price soon will start to fall. It would have been true if only the Bollinger Bands and the Stochastic was used as indicators.
In this analysis is also the ADX/DMI and MACD/DMI used; they confirm a likely up going trend.
When to sell?
At 10:00 are the upper band and the price line crossing each other; the price is still increasing and the trend is likely.
At 10:40 are the price line and the upper band again crossing each other and the trend is less likely. The stochastic is also indicating that the price is decreasing.
The analysis indicates that the sell signal is at 10:40 .
Please note
Please note that this post is only illustrative and the purpose is to give insight into how to trade with indicators.
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