What is MACD?

MACD or the Moving Average Convergence Divergence is the indicator which let you know whether the currency price is in a high or a low trend. MACD Oscillator has two lines which are the MACD line and the signal line. The MACD line points out the difference between two Exponential Moving Averages (EMA) whereas the Signal line is an EMA of the MACD line itself. With the intention of displaying the buy or sell alarm, the Signal line is marked at the top of the MACD. Generally, a 26 days and 12 days EMA are used for the MACD indicator if based on the closing date, whereas a 9 day EMA will be used, for the Signal line.

There are two ways which are usually employed to understand the MACD. The first one is crossovers - if the MACD falls lower than the Signal line, it is an indication of upcoming low trend and recommends that may be it is a good time to place a short position trade. And if the MACD go beyond the signal line, it gives you an idea about an indication of upcoming up trend and recommends that may be it is a good time to place a long position trade.

The other way is divergence - if the currency price reverses from the MACD, it shows that the trend is going to end. If there is a negative divergence it means that the currency price produces a new high which is higher than the previous high, but the MACD failed to get to the new high, then you should be cautious that the current up ward trend in prices movement may go to the reverse direction. For positive divergence, it happens if the currency price beat a new low which is lower than the previous low, and the MACD failed to get to the new low, you should be cautious that the current currency price downfall will get over and up ward trend will occur once more.

Read more...

Indicators for Forex Trader

Industrial produce

Industrial production report, as the name suggests is the report based on the production and its changes of factories, industries, utilities and mines across the country. The report also shows the optimization of their utilization- the degree to which their capacities are being used.
Forex Traders who rely on this indicator are mostly concerned about the utility production which is highly volatile because the utilities industries are heavily influenced by changes in weather. Weather changes can cause revisions between the reports which consequently can cause volatility in the currency of the country.


Consumer Price Index
The CPI is the most widely known indicator which measures the consumer good price change over more than 180 different categories. The CPI report is often compared with the export report to find out what profit (or loss) the country is making on its goods and services. Closely related other indicators, which can be helpful to forex traders, can be the purchasing managers index (PMI), the employment cost index (ECI), durable goods report, and the hosing stats.

Exports are always well scrutinized by the forex traders in any case since the export prices often change with any gain or loss on the nation’s currency.

All the above and previously mentioned indicators can prove to be a valuable resource to the forex traders when applied judiciously.

Read more...

Economic Indicators in Forex

Forex traders depend on the same two essential analysis- the fundamental and the technical. Technical analysis are used much for the same purpose-price is supposed to mirror all news while the charts become the matter of analysis.
Fundamental analysis looks more on the inherent value of the investment and takes into consideration the economic conditions that influence a nation’s currency. Some major fundamental factors that affect the value of a currency in forex:


Economic indicators
Economic indicators comprise of the reports given by the government or even by a private association that contain details about the nation’s economic growth and development. Apart from these other factors and policies are also bound to have a direct /indirect influence on the nation’s development.

Such reports are published at regular intervals providing indications and insights into the nation’s improvement (or decline). Forex and stock market is directly influenced in price and volume in case there is any departure from the standard.

Economic reports are good source of vital statistics such as the unemployment figure, housing, etc. Needless to say each indicator serves its own purpose- some of the more important can be outlined as:


GDP or the Gross Domestic Product
GDP is by far the most comprehensive indicator of the country’s economic health. GDP is the market price of all the products and services produced in a country in one financial year. GDP can and does a double edged sword as so most investors consider the preliminary and the advance reports released in the months before the GDP figures come out.


Retail Sales
Retail sales reports compute the total sales receipts of all the retail stores of the country. The measure is gotten from a varied sample of the stores around the country. The retail sales reports is practical in that it is timely and measures the consumer spending patterns that takes into consideration the seasonal variables. Retail sales reports are used to forecast the performance of other lagging indicators. The reports are good for determining immediate direction of the economy. Retail sales reports are almost equivalent to the sales activity of a public company.

Read more...