Trading strategies for trading on fluctuations
This is one of the most widely recognized and used swing trading strategies, as it shows both the trend direction and the trend reversal. The MACD indicator has two lines: a signal line set to zero and a moving average line. Every time the moving average crosses the signal line, it indicates the potential for a trade: the cross on the up side indicates a bullish position, and the cross on the down side indicates a bearish position.
A crossover in the opposite direction considering the position holds signals for the exit point for that position.
Support and resistance levels
Support and resistance levels create the basis for building effective trading strategies and combine the postulates of technical analysis. They confirm changes in quotes based on certain patterns, and the latter take into account all (world events, news factors, technical rules).
What is the levels on Forex?
Quotes of currency pairs change constantly. But there are always periods of consolidation between news spurts and changes after trend movements. The price begins to fluctuate around the “one axis”. This is the basis for some trading strategies — in the uncertain movement down and up, you can find a trend that indicates a further increase or fall in the price. This approach is implemented in the use of “candle shapes”.
Traders determine the support and resistance levels for today before starting trading. This allows you to plan further work:
- identify signs of a reversal or continuation of the trend;
- enter the market during a period of calm, when market and pending orders are opened at a set price;
- open a trade at the very beginning of the trend and get the maximum profit.
In addition to horizontal levels that indicate the price of consolidation, traders also use inclined levels. They create the boundaries of the trend channel, within which quotes will change. Until the next news release, this trend usually persists, which is used in trading strategies.