Skip to content What indicators do professional traders use to fine-tune their decisions? I'll show you the best trading indicators for adapting your strategy to different market conditions.
Technical indicator
It's a recurring question among beginners who observe experts taking a methodical approach to the markets. What appears to be instinct is actually the fruit of a solid mastery of technical indicators. Properly interpreted, these tools enable you to anticipate market movements, identify relevant opportunities and manage risks methodically. To progress in trading, understanding and knowing how to use these indicators is quite simply indispensable.
What is a technical indicator ? It's simple: it's a mathematical tool that analyzes price data to identify trends and signals trading.
Appropriate use of these tools not only optimizes your money management, but also limits potential losses by adapting your trading strategies. These tools transform complex charts into concrete information, enabling you to make concrete decisions rather than relying solely on your intuition (which doesn't play well in trading).
Why is it so important to your success? Without reliable technical indicators, you're operating without clear benchmarks in a market where $4,000 billion is traded every day. Visit price movements may seem unpredictable, but they often follow identifiable patterns. Understanding the right tools gives you a concrete advantage in the face of Forex volatility, which can be dangerous and confusing for newbie traders.
Visit the best trading indicators that you use every day and that make the difference in your trading decisions. I'll be presenting solutions for all trading styles: from scalping to swing trading, including identifying the most profitable trend reversals. Each technical indicator will be broken down in the most accessible language possible.
A technical indicator is a visual tool displayed directly on (or below) your trading charts. It transforms price data (open, close, high, low) into information that can be easily interpreted thanks to precise and specific mathematical calculations.
These technical indicators play three essential roles in your analysis:
1 - Identify trends : They reveal whether the market is moving up, down, stable or in equilibrium. This information determines your strategic approach.
2 - Detect rollover zones : Trend reversal indicators signal when a movement is weakening and could change direction. What's more, some indicators detect overbought and oversold situations, enabling you to anticipate potential market reversals. These moments often represent the best trading opportunities.
3 - Analyze market activity : Some indicators measure buying or selling pressure, helping you to assess the strength behind each move and avoid false buy or sell signals.
More concretely, if you analyze the EUR/USD pair without a technical indicator, it's like observing candles rising and falling with no apparent logic. Add a moving average, and you can immediately discern an uptrend that's been in place for three weeks. This is exactly why experienced traders systematically use these technical tools - they reveal information invisible to the naked eye.
A list of technical indicators is available to cover all aspects of market analysis.
"Ichimoku Kinko Hyo - Tenkan-sen crossing down" designed by WDgraph.
The Ichimoku Kinko Hyo, created by Japanese journalist Goichi Hosoda in the 1960s, is the most reliable forex indicator for a complete market analysis (and I'm not just saying that because I created the best training on this subject). Its name means "balance graph at a glance", which sums up its philosophy perfectly.
Why does Ichimoku outperform other technical indicators? Unlike traditional indicators that focus on a single aspect, Ichimoku combines five distinct lines to give you a complete analysis:
Tenkan-sen (conversion line) : Identifies short-term movements
Kijun-sen (base line) : Reveals the average trend
Senkou Span A and Senkou Span B: Form the "cloud" that projects future supports and resistances
Chikou Span: Confirms the strength of the current trend
The real strength of Ichimoku lies in its unique ability to combine historical analysis and forecasting. The cloud (Kumo) indicates where prices may find support or resistance in the coming sessions. This time projection makes it the benchmark trend indicator for professional traders.
TIPS
Trading strategy with Ichimoku : On XAU/USD, when the price moves above a thick green cloud, with Tenkan above Kijun, you get a reliable bullish signal. This configuration works well in around 70% of cases on H4 and daily timeframes in my personal experience.
Learning Ichimoku requires patience and practice - it took me several months to really grasp all the nuances. But once you get the hang of it, you see your charts differently.
→ All about the indicator Ichimoku Kinko Hyo
Overview of the moving average indicator on Tradingview.
Moving averages... If you're just starting out, this is the place to start. It sounds simple, but behind that simplicity lies a formidable effectiveness for identifying and following trends. It's unquestionably the best technical trend indicator for beginners, and is used in many trading strategies.
Two versions of this indicator dominate trading:
Simple Mobile Average (MMS) calculates the arithmetic average of prices over a given period. An MMS 20 adds up the last 20 closing prices and divides by 20. It gives you a smoothed view, but sometimes reacts slowly to changes.
Exponential Moving Average (EMA) gives more weight to recent prices, making it more reactive to current movements. Short-term traders often prefer this version for its greater sensitivity. Exponential moving averages are particularly appreciated in certain trading strategies for their ability to react quickly to market variations.
Why are moving averages still an indispensable tool for traders, even today? The moving average transforms the apparent complexity of market prices into a clear line that reveals the market's general direction. When the moving average crosses the price, this can generate a buy or sell signal. When prices consistently move above the average, an upward trend is confirmed. The opposite signals a downward trend. What's more, an opportunity may arise when the price crosses a key moving average, making it possible to identify entry or exit points in different trading strategies.
TRADING ADVICE
How to use Moving Averages : On GBP/USD, I often observe an MME 50 in the H1 period. When the price bounces off this line after a correction and heads back up, it's usually a good buy signal. This technique, which I've been using for over 8 years, has helped me capture a number of interesting movements, especially during volatile periods like the post-Brexit period.
Its versatility makes it an excellent technical indicator: This technical indicator works on all timeframes and all pairs, automatically adapting to market conditions. That's why it features in virtually all the best combinations of trading indicators.
→ Read my article on moving averages used in trading!
So Fibonacci... At first, I must admit I was rather skeptical about all this talk of golden ratio applied to trading. But after testing it for a few years, I have to admit that it often works. In the end, it has become my favorite indicator for anticipating trend reversals.
The fundamental principle of this technical indicator is that, after a significant movement, prices tend to correct according to specific proportions: 23.6%, 38.2%, 50%, 61.8% and 78.6%. These levels, based on the gold number, appear regularly in all financial markets (forex, equities, crypto, OB)...
How to use Fibonacci in trading : you trace your Fibonacci tool from the low point to the high point of a bullish move (or vice versa for a bearish move). The horizontal levels that appear become zones where prices can rebound or stop. It's important to note that Fibonacci levels are often used in conjunction with support and resistance levels to reinforce the reliability of signals.
The 61.8% level (known as the "golden number") is of particular importance. In my experience, around 68% of corrections stop at this level before resuming the main trend. This statistic makes it an invaluable tool for placing your stop-loss and take-profit orders in your trading strategy, while effectively managing downside risk and limiting potential losses.
In September 2023, during USD/JPY's sharp rise from 140 to 150, the retracement at 61.8% (H4 for my part) towards 146.2 offered an exceptional entry point for patient traders. Those who bought at this level were able to take advantage of the bullish continuation to 151.
The common mistake is to treat Fibonacci as a complete trading system. In reality, it excels as a free forex indicator, confirming other technical signals. Combine it with moving averages or support/resistance levels to multiply its accuracy. Using Fibonacci also helps minimize potential losses during market corrections.
Well, if I'm honest, this combination didn't work too well for me at first. I tended to take too many signals. But over time, I've learned to be more selective.
The RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) form the best combination of trading indicators for analyzing both the strength and direction of movements. Together, these two technical indicators reinforce your technical analysis as an effective validation system for taking positions.
The RSI Oscillating between 0 and 100, it measures the speed and extent of price variations. Above 70, the market enters an overbought zone (downside potential). Below 30, it signals an oversold zone (upside potential). We can also speak of divergence with this indicator (a method to be used with caution).
MACD Comprising two lines (MACD and Signal) and a histogram, it reveals changes in momentum. When the MACD line crosses above the Signal line, a potential buy signal appears. The opposite generates a sell signal.
Other oscillators such as stochastics, the Williams Percent Range (percent range) and the Commodity Channel Index (CCI) are also used to detect overbought and oversold zones. Stochastics can be used to identify the relative strength of a trend and anticipate market reversals, while the percent range measures the extreme levels of an asset to spot potential trading signals. The Commodity Channel Index, meanwhile, evaluates price deviation from its average to signal entry or exit points.
Why does this combination perform so well? The RSI indicates the intensity of the movement, while the MACD reveals the timing of the change. Together, they eliminate many of the false signals that affect each indicator individually.
The optimal strategy is to wait for the two indicators to align before entering a position. This filters out average-quality trades and focuses your efforts on high-potential opportunities. That's exactly why this combination is one of the most widely used technical indicators in professional trading. By the way, I invite you to listen to the podcast I've made on this subject on my training platform, which would be much more concrete for you.
TOP ARTICLE (in creation)
→ What is the RSI? how to calculate it? and above all, how to use it?
→ Understanding the MACDUse the right settings for your trading strategy
Overview of Bollinger Bands on Tradingview.
Bollinger Bands, developed by John Bollinger in the 1980s, have become a must-have for me in short-term trading. What I like about this technical indicator is that the bands quantify market volatility in a fairly intuitive way. For short-term trading, I've rarely found anything better.
Strip construction : A central moving average (usually 20 periods) framed by two bands calculated from the standard deviation of prices. When volatility increases, the bands widen. When volatility decreases, they contract.
Bollinger Band signals are particularly effective in specific market situations, such as consolidation phases or high volatility. They can also be used to identify overbought and oversold situations, helping to anticipate potential reversals.
Why do they dominate short-term trading? LBollinger Bands automatically adapt to market conditions. In calm periods, they tighten, signalling that a volatility expansion is approaching. In turbulent times, they widen to capture the amplitude of movements.
Three main signals guide your decisions:
The bounce on the bands: When the price touches the lower band and then rebounds, a buy signal appears. The opposite is true for the upper band.
Compression: When bands become extremely tight, a major break is often in the offing within a few hours.
Tape release : A price outside the bands indicates an exceptional movement in progress, often the precursor of a strong trend.
The mistake I made for a long time was to trade every contact with the bands. Now, I've learned to be more patient and to identify the contexts where these signals are most likely to work.
→ Take our free course to learn how to trading with Bollinger bands.
Now that's something I've been slow to appreciate. At first, I thought these signals were too slow, too "late". But in swing trading, this "slowness" actually becomes an advantage. In swing trading, it has become my reference signal.
What's the Golden Cross and Death Cross :
Why are these crosses so effective? They filter out market noise to reveal structural trend changes. These signals can also be used to assess the strength of a trend: a sharp crossover, accompanied by strong momentum, often indicates a powerful trend, while a weak crossover can signal the end of a movement or a reversal. Unlike short-term signals, which are often erratic, these crossovers identify movements that can last for months or even years.
The psychological strength of these signals amplifies their effectiveness. When a Golden Cross appears on a major pair like EUR/USD, it attracts the attention of institutional algorithms and investment funds, creating a self-fulfilling dynamic.
Additional tips:
Confirm with volume : A Golden Cross with increasing volume is much more likely to succeed than a low-volume cross.
Analyze the context: These signals work best when they confirm other technical elements (breaking resistance, exiting consolidation).
Manage patiently: Swing trading requires patience. Don't try to capture every fluctuation, but concentrate on the major trends.
The Golden Cross on USD/JPY in May 2023 preceded a 6-month rally of over 1,500 pips. Traders who were able to identify and exploit this signal performed exceptionally well.
These crosses only generate 2-3 signals per year per pair, but their high success rate and considerable earning potential make them essential opportunities for any serious swing trader.
Case study of May 2023 on the USD/JPY currency pair.
Technical indicators are more than just sophisticated calculation tools displayed on your charts. They are your strategic allies in anticipating movements, confirming your analyses and securing your trading decisions in the world of Forex. Mastering technical indicators is essential to progress in trading, because the most effective techniques are based on a rigorous selection of indicators adapted to your strategy.
Things to remember:
⇒ The Ichimoku offers you the most comprehensive view of the market, combining trends, supports/resistances and time projections.
⇒ Moving Averages remain your basis for identifying and tracking key trends.
⇒ Les Retracements de Fibonacci excellent for detecting precise turning points.
⇒ The RSI/MACD combination maximize your chances of success with cross-validation.
⇒ Bollinger Bands dominate short-term trading by quantifying volatility.
⇒ Les Golden/Death Cross reveal the major trends perfect for swing trading.
How to get started : Listen, resist the urge to use all those indicators at once. I know, it's tempting. Pick just one, test it for at least a month on a demo account, and only then can you consider adding more. It's not as sexy, but it works better.
Trading expertise takes time. It takes hours and hours of observation, analysis and practice. These indicators are just tools - you make the difference. Don't forget to adapt your trading strategies to your profile and your objectives to maximize your results.
Take action: Open your trading platform, choose your first technical indicator and start practicing. You don't have to be perfect right from the start - the important thing is to get started.
If you really want to take your trading to the next level, it's time to get involved. volume indicators. All too often neglected, these tools are essential for validating your signals and spotting the strongest trading opportunities. Volume is like the "voice of the market": it reveals the true strength of a trend and helps you avoid the pitfalls of false signals. Volume indicators are therefore real allies for traders who want to make informed decisions and maximize their profits.
Why does volume matter in Forex?
In Forex, volume is a key technical indicator, as it reflects traders' commitment to a given instrument. The higher the volume, the stronger and more durable the current trend is likely to be. Conversely, low volume can signal a lack of interest, or a fragile trend that could be quickly reversed. Volume indicators therefore enable you to identify when the market is really ready to move, and avoid getting trapped in half-hearted moves. For any serious trader, analyzing volume means adding a layer of security to your technical analysis and trading strategy.
The best volume indicators to use
There are several technical volume indicators that can help you validate your trading signals and better understand market dynamics. Here are the ones I use most often:
On Balance Volume (OBV) This indicator adds volume according to price direction. If the price closes higher, the day's volume is added; if it closes lower, it is subtracted. OBV allows you to detect whether volume is confirming an uptrend or a downtrend, and to anticipate major reversals.
Accumulation/Distribution (A/D) This powerful indicator measures the relationship between price and volume to determine whether an asset is accumulating (buying heavily) or distributing (selling heavily). It helps you spot discrepancies between price movement and trader behavior, which can signal an imminent change in trend.
Money Flow Index (MFI) The MFI combines price and volume to assess the strength of a trend. It works a bit like an RSI, but incorporates volume, making it particularly relevant for validating buy or sell signals in volatile markets.
Using these volume indicators adds an extra dimension to your analysis and increases the reliability of your trading signals, especially in markets where volume plays a decisive role in price trends.
Tips for interpreting volume effectively
To make the most of volume indicators, here are a few practical tips that I apply on a daily basis:
Always combine volume with other technical indicators For example, combine OBV or MFI with a moving average or Bollinger Bands to confirm the strength of a trend or the validity of a signal. This combination of tools allows you to filter out false signals and optimize your trading strategy.
Analyzes volume over several timeframes A short-term volume signal (M15, H1) can be reinforced or invalidated by a long-term underlying trend (H4, Daily). Get into the habit of comparing volume over different periods to better understand market dynamics.
Uses volume to validate, not to generate signals Volume should be used to confirm a signal given by another technical indicator, not to trigger a position on its own. It's a validation tool, not a signal generator.
Adapt to market volatility In periods of high volatility, adjust the parameters of your volume indicators to avoid false alarms. Bollinger bands, for example, can help you spot phases of volume compression or explosion.
By applying these tips, you'll make volume indicators a cornerstone of your trading strategy. They'll help you make more rational decisions, better manage your risk and seize the best opportunities on the forex market. Remember: volume is the key to understanding the true strength of a trend and avoiding unpleasant surprises.
Jonathan Bardon
Independent pro trader since 2012 and Ichimoku expert since 2017, Jo is the trainer at our trading center. Xenesy.
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