Technical Analysis

Analyze Market Movements

Technical Analysis Articles

Here at CMS we pride ourselves on our superb forex charts, that comes with our flagship trading platform, VT Trader. It features easy to use drawing tools, technical indicators and charting capabilities. In this section we will explain how technical analysis works by providing informative articles on the most popular and widely used forex technical indicators. Traders are walked through comprehensive examples of how these technical indicators generate trading signals, examples of some trading strategies, and also explain the information that can be observed about the conditions of the market.

It is highly recommended that you practice with the VT Trader platform as you read through these articles. It is easy to download VT Trader and to sign up for a free practice account if you dont have one already.

Moving Average Based Indicators
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Moving Average
The Moving Average is the most basic technical indicator when it comes to technical analysis. It is used to identify trends, as it smoothes price action into a signle line. The Moving Average gives basic trading signals when price crosses it.
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Moving Average Envelope
The Moving Average Envelope indicator creates parallel lines to a moving average at certain percentages. The lines create a band that can help measure price volatility and extremes.
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MACD (Moving Average Convergence Divergence)
The MACD indicator charts the convergence and divergence of short term and long term moving averages. MACD shows graphically when the short term movements of price rise or fall faster than the longer moving average would suggest. This indicates the recent trend.
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Volume Based Indicators
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Volume
Volume is important to technical analysis because it measures the the amount of buyers and sellers responsible behind market moves. If a currency pair has a strong price move either up or down, the perceived strength of that move depends on the amount of volume for that period.
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On Balance Volume
On Balance Volume measures positive and negative money flow into currencies and acts as a leading indicator that may predict upcoming price changes.
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Accumulation/Distribution
This volume indicator tries to gauge supply and demand for a currency pair by discovering if investors are generally “Accumulating” (buying) or “Distributing” (selling) the pair.
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Chaikin Money Flow
Chaikin Money Flow is an oscillating version of Chaikin's earlier indicator, Accumulation/Distribution. Both indicators measure the degree to which money is flowing into or out of a currency pair.
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Volatility Based Indicators
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Bollinger Bands
Bollinger Bands are a very popular indicator that can be used to gauge and analyze periods of consolidation, when a currency is overextended, and establishing price targets. It uses the statistical concept of standard deviation to aquire its bands.
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Ranging Indicators / Oscillators
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Relative Strength Index
RSI is a trend following oscillator that ranges from 0 to 100. It gives an indication whether a currency is currently "overbought" or "oversold", or in other words, it is a measure of momentum. RSI is one of the most popular technical indicators in technical analysis.
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Stochastics
Based on the idea that during an uptrend prices tend to close at the high of the candle, and during a downtrend at the low of the candle, the Stochastic indicators measure momentum.