Overbought and oversold indicators

overbought oversold indicators
Forex Indicators

Most forex traders make every endeavor to search for the perfect moment of entering the position. This may seem exciting, but the result in a long term is mainly negative. The truth is that there is no right way for profitable trading on the financial markets. Successful traders often rely on a set of indicators to help them in the proper timing on the market. Here are some of the most commonly used indicators.

Again, here we have many indicators, but the most common one seems to be the three-day RSI. This indicator shows the total amount of days of rises and days of falls, during a specified time period. It is calculated and takes values from zero to one hundred. If all days point increase, the indicator has a value close to 100, but if they show decrease – the value is near to zero.

A value of 50 is considered to be neutral. Index values below 20 indicate oversold and over 80 show overbought.

The indicator can be used in combination with trend indicators and indicators that confirm the trend, for taking a decision whether to enter the position or not.

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