Foreign exchange technical indicators: how to use kinetic energy indicators

Lagging index (kinetic energy index)

How can we identify the beginning of a trend?

The indicators that can help us complete this critical task we have learned before, such as the MACD indicator and the moving average.

Once the trends of these indicators are formed, they will send a signal that the trend is on, although when these indicators send a valid signal, the timing of entry may have been delayed.

However, the advantage of such indicators is that they have a much lower chance of sending an error signal.

As shown in the GBP/USD daily chart above, we have used 10 EMA (blue line in the figure), 20 EMA (red line in the figure) and MACD indicators here.

Around October 15th, the 10 EMA broke above the 20 EMA, sending a golden cross signal.

In conjunction with this, the MACD indicator also issued a low gold fork, which is also a buy signal.

If you choose to do more at a later time, you will enjoy the generous rewards given by this rising market.

Subsequently, both the MACD indicator and the moving average issued a sell signal.

In the subsequent strong downward trend, investors who choose to go short will win huge profits.

We can see the picture of money shining in front of your eyes.

Now, let’s look at the next picture, you will see how these cross signals sometimes send wrong trading signals.

On March 15, the MACD indicator issued a golden cross signal, but the moving average did not send a trading signal.

If you only trade based on the buy signal issued by the MACD indicator, man, you will suffer a lot of losses.

This situation also occurred at the end of May. The buy signal issued by the MACD indicator did not cooperate with the moving average golden fork. If you choose to go long at the time, you will put yourself at a disadvantage because the exchange rate has since fallen slightly.