Indicators are vitally important in technical analysis. Technical analysis studies past performance of given assets to predict future movements. For this objective, technical traders use candlestick and chart patterns, psychological levels, technical indicators and simple trendlines.
It’s critical to note that the indicators are purely technical and cannot take into account significant economic and political news. For this very reason, it’s always recommended to keep an eye on economic announcements.
OSMA
OSMA indicator is based on moving average oscillator. The OSMA MT4 indicator helps traders better analyze the strengths of a trend. Green bars that are above the 0 reading represent uptrend, whereas the red below the 0 level bars represent downtrend.
OSMA is a lagging indicator, which means it follows price and improves price action visualization and information digestion.
Exponential Moving Average (EMA)
Exponential moving average is like simple moving average (SMA) but more popular. The EMA puts more focus on recent price changes in its formula, which is why traders prefer using it. The EMA is a trend trading, lagging indicator that follows prices and makes trends easier to spot and trade.
The EMA can be coupled with various other indicators and strategies. In a trending market, a rising EMA line gives traders a support to price action and a falling EMA serves as a resistance.
Volume indicator
You can see the volume indicator below. Volume is plotted below the price chart and typically is represented by green and red bars. Green bars mean that the price is increasing, whereas red bar indicates decrease.
Increase in volume usually indicates that there’s an interest in the asset. If price is at the pattern compilation point and the volume rises, it means that there’s a good chance that the pattern will be completed. If a trader is in a trend and volume decreases, the price might reverse. And vice versa, good volume in a trending market might be a sign that the trend will continue.
The Relative Strength Index (RSI)
The Relative Strength Index is an oscillator that oscillates between 0 and 100 levels. Higher than 70% indicates overbought condition and downward reversal is expected. Similarly, lower than 30% level signals oversold condition and upward reversal is expected.
RSI can be coupled with other indicators and used in various trading strategies. It’s important to note that the RSI works best in ranging markets, and it’s a leading indicator type. If you use the RSI in trending market conditions, you’ll get a lot of false signals.
The Alligator indicator
The alligator is highly useful in trending markets. The indicator is created based on the idea that markets are going from active to passive phases. The indicator consists of three moving average indicators. When the moving averages get closer together, alligator jaws are closed, it means that the market is experiencing a slowed down phase. And calm environment is perfect for placing the order, so that when the markets start moving again, jaws start opening, traders get the chance to catch the movement.
Most of these indicators are preinstalled on MetaTrader platforms when you install the software on your device. Traders can download and install additional indicators using Meta Market. There are free and paid indicators and algorithms to choose from. However, keep in mind that not every indicator or Expert Advisor that you can buy in the market is going to work properly. It’s critical that you do your research before making the purchase.