The most common indicators used by traders are, in no particular order,
RSI is a very popular range indicator that has been available to traders for a long time, by the standards of the trading community. The indicator is used to create trading signals by identifying oversold/overbought levels that are thought to coincide with buying or selling opportunities, respectively. It can be useful in trend patterns too, but only if used in combination with other, more precise trend indicators.
The RSI is available with just about any trading platform in the market.
MACD can be thought of as the trend equivalent of the RSI. It is only useful in trending markets, and is much more sensitive to price action. Traders tend to have difficulty using this indicator due to the hardship involved in predicting the movements of strongly directional price movements, but its widespread use, and relatively long history makes it an indispensable part of many trend following strategies.
The most suitable strategy with the MACD is trading it on the basis of divergence/convergence patterns.
MACD is also available with most forex trading packages.
Fibonacci Retracement/Extension Levels
Fibonacci analysis is useful in both ranging and trending markets, and it is practiced widely by traders from all backgrounds. It is based on the naturally existing patterns created on the basis of the Fibonacci Numbers which are studied widely by mathematicians. Their most common form, the Fibonacci Retracement/Extension levels are used to determine the length of a correction, or the size of the next leg of a price movement.
Fibonacci analysis tools are made available by the majority of trading software.
Moving averages are ubiquitous tools of trend analysis and are used in the creation of almost any technical strategy. Successive levels of moving averages tend to create hurdles for the price action which any existing trend must breach before it can continue. For example, the resistances created by 15-, 30-, 50-, 100-period MAs will probably be the main obstacles against an existing trend, and will also be the locations where corrections are observed in the absence of any external factors such as those created by unexpected news and data releases.
Similar to the RSI, the stochastics indicator is a somewhat more precise tool commonly used in range trading. Instead of the RSI, Stochastics indicator utilizes to separate moving averages, so it’s possible to exploit the crossover phenomenon with this indicator. It also forms the basis for the Williams Oscillator commonly found in chart packages.
If you’re a beginning forex trader, we strongly advise that you devote the initial phase of your career to studying, practicing, and mastering these indicators, since they are the most relevant ones for a beginner. In addition, they are the simplest type and the base for a large number of other indicators in their class. The RSI, for example, is almost the same as the demark indicator. Various oscillators are simple combinations of various moving averages. Fibonacci retracement, or extensions, are a good introduction to the various other indicators in the same class.
Ready for the advanced level? If so, the next step is: Introduction to Fundamental Analysis