One of the first things that you probably learn when learning forex is indicators and how you will earn using them.
From moving averages crossovers to RSI or stochastics, all of them were created to represent “certain” market condition on the last n-periods, and not as a buy or sell signal.

As stockstocharts define technical indicators, they are nothing more than a “series of data points derived by applying a formula to the price data of a security” (or any other instrument such as currency pairs).
On other words, in order to get the indicator reading, a mathematical formula needs to be applied to the last N periods.
Right, we are talking about how the market behaved on the last N periods, not how the market will behave in the next N periods.
Based on this definition, why would I think a technical indicator is intended to show me the future direction of a currency pair? Instead, what they are meant to show (and this is the reason most of them were developed for) is to help us see certain condition of the instrument or how the market behaved over the last n-periods, again, we are taking about the PAST, it has nothing to do with future movement:
RSI(14) – RSI of 14 periods – shows us the ratio of gains over losses on the last 14 periods. If it has a reading above 50, it states that on the last 14 periods, the average gains are larger than the average losses.
If the reading is below 50, means that on the last 14 periods, the average losses are larger than the average gains.
EMA(50) – Exponential moving average of 50 periods – It tells us what’s the average value (exponential) of the instrument on the last 50 periods. If the EMA has an upward slope, it means that on average, the market has gone up, if it has a downward slope, on average the market has gone down on the last 50 periods.

On both cases (and all indicator cases), the indicator is pointing up (or down) because price went up (or down) not the other way around. On other words, the indicator doesn’t make the market go up or down, it’s the market that makes the indicator point up (or down).

The RSI is widely used as an overbought/oversold indicator. When the RSI moves above the 70 line, it is considered in an overbought condition (and the market should move down), and when it moves below the 30 reading, it is considered and an oversold condition (and the market should move up).
After the RSI reading went above 70 (entered into an overbought condition), the USDCHF continued its way up (it didn’t change direction), in fact, the USDCHF has moved up over 500 pips after the RSI signal.
And it is exactly the same for other technical indicators, we tend to think that the indicator will make the market move in one direction, but that’s not the way it works.

Technical indicators are not useless, they help us see certain market conditions that are not clear by just looking at the market action. They help us see different possibilities, sometimes they even simplify the market movements.
And it is alright to use them, but you need to make sure you are using them as they are supposed to be used: to indicate certain condition of the market.
Use something different as a trigger signal: candlesticks, price action, breakouts, retracements, etc.

26 Comments
  1. stornobrzinol 7 months ago

    Magnificent website. Lots of useful information here. I’m sending it to some friends ans also sharing in delicious. And of course, thanks for your sweat!

  2. Utterly composed written content, Really enjoyed examining.

  3. Pretty! This was a really wonderful post. Thank you for your provided information.

  4. web hosting was 5 months ago

    Excellent article. Keep writing such kind of info on your
    blog. Im really impressed by your site.
    Hi there, You’ve performed an excellent job. I’ll certainly digg it and personally recommend to my friends.
    I’m sure they will be benefited from this website.

  5. http://t.co/54yyFOsfye 5 months ago

    you are truly a just right webmaster. The site loading
    speed is incredible. It sort of feels that you’re doing any unique trick.
    Moreover, The contents are masterpiece. you have done a fantastic process on this subject!

  6. t.co 5 months ago

    Thank you a lot for sharing this with all people you actually understand what you are talking about!
    Bookmarked. Kindly also seek advice from my web site =).
    We could have a link exchange arrangement among us

  7. your scoliosis surgery 5 months ago

    I am sure this paragraph has touched all the internet viewers, its really really pleasant article on building
    up new weblog.

  8. tinyurl.com 5 months ago

    Greetings! Very helpful advice in this particular post!
    It is the little changes that produce the biggest changes.
    Thanks a lot for sharing!

  9. our asmr 5 months ago

    Right here is the right webpage for anybody who really wants to understand this topic.
    You know so much its almost hard to argue with you (not that I actually would want to…HaHa).
    You definitely put a fresh spin on a subject that’s been written about for a long time.
    Wonderful stuff, just great!

  10. j.mp 5 months ago

    An intriguing discussion is worth comment. I do believe
    that you should write more about this topic, it may not be a taboo subject but usually people don’t discuss these issues.
    To the next! Kind regards!!

  11. with asmr 5 months ago

    Wonderful work! That is the type of info that should be shared across the net.
    Shame on the seek engines for not positioning this post higher!
    Come on over and seek advice from my site . Thank you =)

  12. This text is invaluable. How can I find out more?

  13. app.gumroad.com 5 months ago

    Thank you for sharing your thoughts. I really appreciate your
    efforts and I am waiting for your further post thank you once again. asmr https://app.gumroad.com/asmr2021/p/best-asmr-online asmr

  14. is quest bars 5 months ago

    Your way of telling everything in this piece of writing is
    actually good, all can simply understand it, Thanks a lot.

    quest bars http://bitly.com/3C2tkMR quest bars

  15. http://bit.ly/ 5 months ago

    You ought to take part in a contest for one of the most useful websites on the net.
    I most certainly will highly recommend this web site!
    cheap flights http://1704milesapart.tumblr.com/ cheap flights

  16. bitly.com 4 months ago

    Wow, that’s what I was searching for, what a
    material! present here at this blog, thanks admin of this
    web page. scoliosis surgery https://0401mm.tumblr.com/ scoliosis surgery

  17. I have read so many posts regarding the blogger lovers except this
    piece of writing is really a good post, keep it up. scoliosis surgery https://coub.com/stories/962966-scoliosis-surgery scoliosis surgery

  18. www.iherb.com 4 months ago

    Have you ever thought about including a little bit more than just your articles?
    I mean, what you say is important and all. But
    imagine if you added some great photos or video clips to give your posts more, “pop”!

    Your content is excellent but with pics and clips, this blog could certainly
    be one of the very best in its niche. Awesome blog! quest bars https://www.iherb.com/search?kw=quest%20bars quest bars

  19. bit.ly 4 months ago

    It is in reality a great and useful piece of information. I’m
    glad that you just shared this helpful information with us.

    Please stay us up to date like this. Thanks for sharing.
    ps4 games https://bit.ly/3nkdKIi ps4 games

  20. I like this site its a master peace ! Glad I detected this on google .

  21. ps4 games it 3 months ago

    Hello there! This post couldn’t be written any better!

    Reading through this post reminds me of my previous room mate!
    He always kept chatting about this. I will forward this post to him.
    Pretty sure he will have a good read. Thanks for sharing!

  22. ps4 games or 3 months ago

    Hi Dear, are you really visiting this website regularly,
    if so then you will absolutely get good knowledge.

  23. I like the helpful information you provide in your articles. I will bookmark your blog and check again here regularly. I am quite certain I will learn lots of new stuff right here! Best of luck for the next!

  24. Europa-Road Kft. 2 months ago

    Would love to forever get updated great weblog! .

  25. it asmr 1 month ago

    Wow, incredible blog layout! How long have you been blogging
    for? you made blogging look easy. The overall look of your web site is excellent, let alone
    the content!

  26. bitly.com 3 weeks ago

    Hi there, after reading this awesome piece of writing i am also happy to share my experience here with mates.

Leave a reply

Your email address will not be published. Required fields are marked *

*

CONTACT US

We're not around right now. But you can send us an email and we'll get back to you, asap.

Sending

FINWAZE makes no representations or warranties, express or implied, in relation to this website (www.finwaze.com) or the information and materials provided on this website. It does not also warrants that this website will be constantly available or available at all times. The information on this website is complete, true, accurate or non-misleading. Nothing on this website constitutes, or is meant to constitute, advice of any kind. FINWAZE shall not be liable for any damage or injury, whether direct or indirect, that it may cause in relation to the contents of, or use of, or otherwise in connection with this website. By using this website, you agree to the reasonableness of the limitations of liabilities herein set out and further agree to assume whatever risk, loss, damage or injury in may cause in connection to the use of this website. No claims shall be brought personally against the officers and employees of FINWAZE, in connection with the use of this website. The user of this website agree to the limitations of warranties and liabilities herein set out to protect the officers, employees, agents, subsidiaries, successors, assigns and sub-contractors as well as FINWAZE. Any unenforceable provisions that may be found on this website under applicable law shall not affect the enforceability of the other provisions.

Legal Documents  |  ©2022 Finwaze Philippines

Pin It on Pinterest

Share This

Log in with your credentials

Forgot your details?