Not all indicators are about giving you conclusive buy and sell signals. It is the fact that you need proper buy/sell signals to know where to enter and exit a pair profitably. But that’s not the end of the story at all. There’re more than a few things which come into the picture when it’s about profiting from this continuously variable market. Instead what you need to understand where trend reversals are going to come in. This is just where this Forex AC indicator can help you out.
Calculating Trend Reversals:
Think of it this way, every single market analysis you make is as per market trend analysis before going forward with that transaction. Accordingly, you even go ahead with that transaction itself. But what if the market reacts due to factors and variables after you already have an entry position?
This is just how even professional traders end up losing their trades every once in a while. Trend reversals along with price actions beyond technical analysis can cause your profits to turn into losses. These reversals are after-effects of a collisional culmination of certain factors and variables. Known as the driving force in common terms, it underlies visible market data, and it’s what drives market price action.
The thing is, with commonplace indicators, you’re deriving an overall technical analysis as per each and every market data strand. But with a Forex AC Indicator, you’re diving deeper and analyzing the driving force to determine the direction of price action as per trends and patterns.
AC or Acceleration Indicator:
Acceleration Indicator determines the value of the market driving force explained earlier. It accounts multiple aspects of the market to come up with an overall account of driving force. It determines exactly the direction this market is going to turn up as per the data in it so far.
Characteristically, it comes with a zero or naught line which acts as the median for understanding force values. Bars going above it show positive driving force while bars below it show negative driving forces at work.
What matters to you is using these bars of your Forex AC to conclude on future price movements. The magnitude and height of these bars show overall force behind trend continuation as per price action. You will find it relatively similar to the market chart which too will show up above.
Keep an eye out for:
• Open/Close Parity:
Better the parity between open and close prices, easier it is for you to conclusively analyze and interpret the market. Parity between these two means that the market is reacting as per normative price action patterns.
• Bar Height:
Height of the bar indicates overbought/oversold market conditions. You need to be aware of these conditions as they more often than not give rise to trend reversals. Refer to the acceleration or declaration of these bars to give you a comprehensive idea.
So, with a Forex AC indicator, what you can do is ensure profits by ascertaining whether the profits are on the way in the first place.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.