Types of Market Conditions
There are 4 types of market conditions that often occur in the forex market, and each one-way analysis will not work on all four types of conditions. Therefore, to make our analysis accurate then every way of analysis is only used in one market condition. In addition to analyzing certain market conditions also required certain indicators. Therefore the selection of the right indicators can be an important factor in the accuracy of an analysis. Here are 4 types of market conditions and how to analyze the conditions:
In this condition, the market moves back and forth horizontally so it usually forms a hallway. Each upper and lower side of the aisle becomes support and resistance area. In these conditions the way trading that can be used is by scalping is by buying in the support area and selling area resistance. If the chart is around the support line then the next direction is up, if the chart is around the resistance line the next market direction is down. So the way the analysis can be used is like this:- Make a support and resistance line
– Install the stochastic oscillator indicator to provide a ready signal to enter the market
– The entry point is when candlestick forms a reversal pattern and stochastic show overbought/oversold. Or when crossing stochastic.
Break / Volatile Conditions
Break conditions are conditions where the market just destroyed the barrier, so the market power is large. Therefore at break conditions, the price will go very fast. Thus his analysis will focus on finding the point to enter the market appropriately. The exact indicator on this condition is the Bolinger band and Volume. How to analyze it:- Install Bollinger bands to see market volatility
– Use the volume indicator to see the power break
– The entry point is when the next open candle is formed, where the Bollinger band widens and the volume of the candle that breaks larger than the previous volume.
A saturated condition is a condition whereas if the market can no longer move further, so the most likely is the market will reverse direction. Moment reversal of this direction is the opening of positions with very little risk. The exact indicator used in this condition is the indicator of the type oscillator Moslem RSI or stochastic. In addition, it can use the money flow index.The focus of the analysis on this saturation condition is to find the entry point that indicates the market is ready to reverse direction. How to analyze:
– Set the indicator money flow index (5)
– Install the stochastic oscillator
– The entry point is when stochastic is under 20 or above 80, and MFI is 0 or 100.
In chaos market conditions more difficult to predict because the direction is erratic but we can still determine the direction when it happens convergent. Newmarket direction is known when convergence occurs. And indicators that can be used for this condition such as MACD, stochastic, RSI, William% range or MFI. The focus of the analysis on this condition is to look for convergent conditions and look for an entry point. How:- Use indicators, such as MFI or stochastic
– Convergent is when the graph becomes lower but the indicator becomes higher, or the graph rises but the indicator lows.
– The entry point is when the next open candle is formed after convergence occurs.