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Oscillators

Information is not investment advice

In the previous part of our tutorial, we’ve looked through the most popular trend technical indicators. The thing is that most of the time prices are meandering without a certain direction (they are ranging). While this directionless price movement drives some traders crazy, others manage to make a living on these roundabouts. Traders have a Plenty’s Horn of technical tools for trading ranging market. These tools are called oscillators. We will fill you in on the most popular ones.

Oscillators help us to identify pivotal points of the market – potential reversal areas. These indicators are banded between 2 extreme values indicating overbought and oversold areas. When the oscillator is in the overbought area, it means that the force of the bullish move has weakened and a reversal to the downside is likely. Accordingly, when the oscillator is in the oversold area, it means that the sellers have become weaker and the trend is likely to reserve up. 

Trade with oscillators

Trading with oscillators is based on the recurrence principle: after hitting an extreme value, the oscillator always returns to its central reading. However, there’s a big difference between the dynamics of the price and the oscillator: although they move in tandem with each other, these moves have different proportions. As a result, when the indicator returns to its normal value, the prices usually don’t return to the same point.  

Oscillators are most effective when the prices move sideways. As the purpose of all oscillators is the same, there’s little point in adding several oscillators to one chart. Use oscillators in combination with other technical tools.

We recommend you to choose default MT4 settings for the indicators, as these parameters were proposed by the creators of these tools.   

EUR CAD H1 chart

How oscillators work

FBS analyst Elizabeth Belugina will explain how oscillators work and how you can apply them

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Quadruple witching is gone and now there are no reasons for the market to hinder. From banks statements and economic data to gas storage reading and Fed’s Powell speech – get ready for active trading.

Strong US Retail Sales Pressed Gold

The US showed strong retail sales for August despite the spread of the Delta virus strain. As a result, the US dollar rocketed and gold dropped by 2286 points in half an hour after the release.

What to expect from Monthly Retail Sales data?

The United States will release MoM Retail Sales data on September 16, 15:30 GMT+3.

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