Measures trend strength on a 0–100 scale — does not indicate direction, only how strongly price is trending.
ADX (Wilder) tells you whether price is trending or ranging. Below 20: weak/range. Above 25: emerging trend. Above 40: strong trend. 50+: very strong.
Also called: DMI
Your breakout system fires on EUR/USD but ADX is 14 — the pair isn't trending. Skip the trade or tighten the target.
A volatility measure — the average distance price travels per period, accounting for gaps.
ATR (Wilder, 1978) is the average of the 'true range' over N periods. True range captures gaps (it's the max of high-low, high-prev-close, low-prev-close) so ATR reflects real volatility, not just intraday swing.
Also called: ATR
EUR/USD daily ATR(14) is 60 pips. You want a stop that survives normal noise → place SL 1.5× ATR away from entry (≈90 pips).
TR = max(High−Low, |High−PrevClose|, |Low−PrevClose|) ATR = SMA(TR, n) (default n = 14)
A volatility envelope — a moving average plus/minus N standard deviations of recent price.
Bollinger Bands (John Bollinger, 1980s) plot a centre line (typically 20-SMA) with two outer bands at ±2 standard deviations. The bands expand when volatility rises and contract when it falls.
Also called: BB, BBands
EUR/USD's bands tighten to their narrowest in 90 days — expect a directional move soon, but the bands don't predict which way.
Middle = SMA(20) Upper = Middle + 2σ Lower = Middle − 2σ
Oscillator measuring price's deviation from its statistical mean — unbounded but typically ±100.
CCI (Donald Lambert, 1980) measures how far the typical price (HLC/3) is from its moving average, scaled by mean deviation. Despite the name it works on any market, not just commodities.
Also called: CCI
CCI = (Typical Price − SMA(TP)) / (0.015 × Mean Deviation) Typical Price = (High + Low + Close) / 3
A channel formed by the highest high and lowest low of the last N periods — used for breakout trading.
Donchian Channels (Richard Donchian, 1950s) plot two simple lines: the highest high and lowest low of the last N bars. A breakout above/below either line is the classic Turtle Traders entry.
Turtle System: enter long on a break above the 20-day high; exit on a break below the 10-day low.
A moving average that gives more weight to recent prices — reacts faster than the SMA to new data.
The EMA applies a smoothing factor that exponentially down-weights older prices. The result tracks current price more closely than an SMA of the same length, at the cost of being noisier.
Also called: exponential MA
On a 5-minute EUR/USD chart, a 9-EMA crossing above a 21-EMA is a classic momentum-shift signal for scalpers.
EMA_today = (Price_today × α) + EMA_yesterday × (1 − α) α = 2 / (N + 1)
Projection levels (127.2%, 161.8%, 200%, 261.8%) used to estimate take-profit targets beyond the original swing.
While retracements look at pullbacks within a move, extensions project where the next leg might end. Common targets: 127.2%, 161.8%, 200%, and 261.8% of the original impulse.
Also called: fib extension
EUR/USD swings up 100 pips, pulls back 50%, then resumes. The 161.8% extension projects a target 162 pips above the pullback low.
Horizontal levels (23.6%, 38.2%, 50%, 61.8%, 78.6%) drawn from a swing low to swing high to identify likely pullback zones.
After an impulse move, price typically retraces a portion of it before resuming. Fibonacci ratios — derived from the Fibonacci sequence — mark the levels traders watch for that retracement.
Also called: fib retracement, fibs
EUR/USD rallies from 1.0700 to 1.0900 (200-pip swing). The 61.8% retrace sits at 1.0776. Bulls watch that level for a bounce back into the uptrend.
An all-in-one Japanese system showing trend, support/resistance, and momentum on a single chart.
Ichimoku Kinko Hyo ('one-glance equilibrium chart') was published by Goichi Hosoda in 1969. It plots five lines including the famous Kumo (cloud) — a shaded area projecting forward support/resistance.
Also called: ichimoku, kumo
Open full pageVolatility channel built from an EMA centre line plus/minus a multiple of ATR.
Similar to Bollinger Bands but uses ATR instead of standard deviation. Less reactive to outliers, more stable for trend channels.
Middle = EMA(20) Upper = Middle + (2 × ATR(10)) Lower = Middle − (2 × ATR(10))
Moving Average Convergence Divergence — trend-following momentum indicator built from two EMAs and their difference.
MACD has three components: the MACD line (12-EMA minus 26-EMA), the signal line (9-EMA of the MACD line), and the histogram (MACD line minus signal line).
Also called: moving average convergence divergence
MACD line crosses above the signal line while still below zero — early bullish reversal signal.
MACD line = EMA(12) − EMA(26) Signal line = EMA(9) of MACD line Histogram = MACD line − Signal line
A smoothed line of average price over the last N periods — the foundation of most trend indicators.
A moving average plots the average closing price of the last N candles, updated each new candle. It strips out noise and reveals the underlying trend direction.
Also called: MA
On a daily chart, the 200-day SMA is widely watched as the dividing line between long-term bull (price above) and bear (price below) regimes.
SMA(n) = (P₁ + P₂ + … + Pₙ) / n
Cumulative volume indicator — adds volume on up-closes and subtracts on down-closes to measure buying/selling pressure.
OBV (Joe Granville, 1963) tracks the running sum of volume, flipping sign with each close. Rising OBV with rising price confirms the trend; falling OBV with rising price warns of weakness.
Also called: on balance volume
Open full pageThe real-time stream of buy and sell orders hitting the market — used to read short-term supply and demand.
Order flow analysis studies the actual orders entering the market — size, aggression (market vs limit), and direction — rather than just looking at price on a chart.
Also called: tape reading, DOM trading
A large buy market order absorbs the offer at 1.0800 and lifts the next 3 levels of the order book in a single tick — an aggressive buyer is in control.
A trend-following stop-and-reverse indicator that plots dots above or below price to signal trend direction.
Parabolic SAR (Wilder) plots dots that flip from below price (uptrend) to above price (downtrend) as the trend reverses. The dots accelerate toward price over time, eventually triggering a 'stop and reverse'.
Also called: SAR, PSAR
Open full pageDaily support and resistance levels calculated from the previous day's high, low, and close.
Pivot points generate a centre line (P) plus support (S1, S2, S3) and resistance (R1, R2, R3) levels for the current session, derived from prior-session high, low, close.
Also called: floor pivots, classic pivots
P = (High + Low + Close) / 3 R1 = 2P − Low S1 = 2P − High R2 = P + (High − Low) S2 = P − (High − Low)
A momentum oscillator (0–100) measuring recent up-moves against down-moves — used to spot overbought / oversold conditions.
RSI (Wilder, 1978) compares the average size of recent gains to the average size of recent losses. Values above 70 are conventionally 'overbought'; below 30 'oversold'.
Also called: RSI
EUR/USD prints a new high but RSI's high is lower than last week's — bearish divergence, momentum is weakening.
RSI = 100 − (100 / (1 + RS)) RS = avg gain over n periods / avg loss over n periods (default n = 14)
Don't sell just because RSI > 70. In strong uptrends, RSI can stay > 70 for weeks. Use it as a context filter, not a standalone signal.
The plain arithmetic average of the last N closing prices — equal weight to every period.
The SMA is the default 'MA' if no type is specified. It smooths price by treating every period in the window equally — which makes it more stable than the EMA but also slower to react.
Also called: simple MA
SMA(n) = Σ(closes over last n periods) / n
Momentum oscillator (0–100) showing where current close sits inside the recent high-low range.
The stochastic asks: where is today's close inside the last N periods' high-low range? If it's near the top of the range, momentum is up; near the bottom, momentum is down.
Also called: stoch
%K = 100 × (Close − Lowest_low_n) / (Highest_high_n − Lowest_low_n) %D = SMA(3) of %K
The degree of price variation in a given period — high volatility = big swings, low volatility = quiet markets.
Volatility is measured in absolute terms (pips, dollars) or relative (%, standard deviations). It expands and contracts in cycles — quiet periods often precede explosive moves and vice versa.
EUR/USD daily ATR(14) typically runs 50–80 pips. GBP/JPY runs 100–200 pips. Same percentage move = different dollar swing.
The average price weighted by volume traded at each level — institutional benchmark for fair value.
VWAP is the running average price weighted by the volume traded at each tick. Institutions use it as an execution benchmark — fills better than VWAP are 'good', worse are 'bad'.
Also called: VWAP
VWAP = Σ(Price × Volume) / Σ(Volume)
Momentum oscillator (0 to −100) showing where current close sits in the last N-period range.
Williams %R (Larry Williams) is essentially an inverted, unsmoothed stochastic. Reads from 0 to −100, with > −20 = overbought, < −80 = oversold.
Also called: W%R, Williams Percent R
%R = −100 × (Highest_high_n − Close) / (Highest_high_n − Lowest_low_n)