
Recently Forex trading has become one of the most looked after occupations that will allow you to earn a living from home or anywhere else. If you are really considering entering the forex trading world you must, by all means, learn and understand a number of indicators that will lend you a big hand on predicting with a high probability the directions forex markets may take as you analyze the price charts for any currency pair you are trading at the moment. Two of these great indicators are: “Bollinger Bands” and “Fibonacci Retracements”.
“Fibonacci retracement levels” are based on a sequence of numbers discovered by the noted mathematician Leonardo da Pisa in Italy. These numbers describe cycles found throughout nature and when applied to technical analysis can be used to find pullbacks in the currency market.
“Fibonacci retracement levels” are a quite effective way “to see the future” (at least in the world of forex markets), with this I mean that it involves anticipating changes in trends as prices near the levels indicated by the Fibonacci ratios. After a significant price move (either up or down), prices will often retrace a
significant portion of the original move. As prices retrace, support and resistance levels often occur at or near the “Fibonacci Retracement levels” (See my other articles on “Fibonacci trading” for more details about this).
The interpretation given to “Bollinger Bands” is that prices tend to stay within the space formed by the tracings of the upper and lower bands. The distinctive characteristic of “Bollinger Bands” is that the spacing between the bands varies based on the volatility of the prices. During periods of high volatility, the bands widen to become more forgiving. During periods of low volatility, the bands narrow to contain currency prices. The common use is that the bands are plotted two standard deviations above and below a simple moving average. They indicate a "sell" when prices are above the moving average and a "buy" when prices are below it. The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.
All successful Forex Traders develop their own System. Learn how.
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