Uptrend and forex trading signals

Discussion in 'General Forex Discussion' started by evapattern, Apr 1, 2019.

  1. evapattern

    evapattern Member

    Keltner Channels


    Uptrend and forex trading signals

    The chart below shows Archer Daniels Midland (ADM) starting an uptrend as the Keltner Channels turn up and the stock surges above the upper channel line. ADM was in a clear downtrend in April-May as prices continued to pierce the lower channel. With a strong thrust up in June, prices exceeded the upper channel and the channel turned up to start a new uptrend. Notice that prices held above the lower channel on dips in early and late July.


    Even with a new uptrend established, it is often prudent to wait for a pullback or better entry point to improve the reward-to-risk ratio. Momentum oscillators or other indicators can then be employed to define oversold readings. This chart shows StochRSI, one of the more sensitive momentum oscillators, dipping below .20 to become oversold at least three times during the uptrend. The subsequent crosses back above .20 signaled a resumption of the uptrend.

    Downtrend and free forex signals

    The second chart shows Nvidia (NVDA) starting a downtrend with a sharp decline below the lower channel line. After this initial break, the stock met resistance near the 20-day EMA (middle line) from mid-May until early August. The inability to even come close to the upper channel line showed strong downside pressure.


    A 10-period Commodity Channel Index (CCI) is shown as the momentum oscillator to identify short-term overbought conditions. A move above 100 is considered overbought. A subsequent move back below 100 signals a resumption of the downtrend. This signal worked well until September. These failed signals indicated a possible trend change that was subsequently confirmed with a break above the upper channel line.

    free forex signals and Flat Trend

    Once a trading range or flat trading environment has been identified, traders can use the Keltner Channels free forex signals to identify overbought and oversold levels. A trading range can be identified with a flat moving average and the Average Directional Index (ADX). The chart below shows IBM fluctuating between support in the 120-122 area and resistance in the 130-132 area from February to late September. The 20-day EMA, middle line, lagged price action, but flattened out from April to September.

    The indicator window shows ADX (black line) confirming a weak trend. Low and falling ADX shows a weak trend. High and rising ADX shows a strong trend. ADX was below 40 the entire time and below 30 most of the time. This reflects the absence of a trend. Also, notice that ADX peaked in early June and fell until late August.


    Armed with the prospects of a weak trend and trading range, traders can use Keltner Channels to anticipate reversals. In addition, notice that the channel lines often coincide with chart support and resistance. IBM dipped below the lower channel line three times from late May until late August. These dips provided low-risk entry points. The stock did not manage to reach the upper channel line, but did get close as it reversed in the resistance zone. The Disney chart shows a similar situation.


    Keltner Channels are a trend following indicator designed to identify the underlying trend.Trend identification is more than half the battle. The trend can be up, down or flat. Using the methods described above, traders and investors can identify the trend to establish a trading preference. Bullish free forex signals are favored in an uptrend and bearish trades are favored in a downtrend. A flat trend requires a more nimble approach because prices often peak at the upper channel line and trough at the lower channel line. As with all analysis techniques, Keltner Channels should be used in conjunction with other indicators and analysis. Momentum indicators offer a good complement to the trend-following Keltner Channels.
     

Share This Page