Sergey Golubev

Momentum is used as an overbought/oversold indicator, to identify potential overbought and oversold levels based on previous indicator readings; The previous high or low of the momentum indicator is used to determine the overbought and oversold levels. Readings above the overbought level mean the currency pair is overbought and a price correction is pending. While readings below the oversold level the currency is oversold and a price rally is pending.

Trend lines can be drawn on the Momentum indicator connecting the peaks and troughs. Momentum is a leading indicator and it begins to turn before price thereby making it a leading indicator. Bullish reversal- Momentum indicator readings breaking above a downward trend line warns of a possible bullish reversal signal while. Bearish reversal- momentum readings breaking below an upward trend line warns of a possible bearish reversal signal.

Stochastics offer traders a different approach to calculate price oscillations by tracking how far the current price is from the lowest low of the last X number of periods. This distance is then divided by the difference between the high and low price during the same number of periods. The line created, %K, is then used to create a moving average, %D, that is placed directly on top of the %K. The result is two lines moving between 0-100 with overbought and oversold levels at 80 and 20. Traders can wait for the two lines to crosses while in overbought or oversold territories or they can look for divergence between the stochastic and the actual price before placing a trade.

Once we know about how to estimate the primary trend (the price to be above/below 200 SMA for example) so we can estimate the secondary trend of it by looking at the other two SMA indicators: 55 SMA (as the fast one) and 100 SMA (as the medium/slow one). The secondary trend (correction and bear market rally) can be received by the combination of those two indicator. On the chart above: the price broke 200 SMA to below for the primary bearish reversal but fast SMA (55 SMA) crossed 100 SMA to above for the bear market rally in the near future for example.

Weekly price was bounced from support level at 0.6421 for the primary bullish reversal: the price broke 200 SMA to above for trying to test the resistance level at 0.6727 for the bullish trend to be continuing.

MN1 price is located below Ichimoku cloud by moding along the lower border of Ichimoku channel - for the bearish trend to be continuing or for the primary bullish reversal to be started in the secondary ranging way. And chinkou Span line is almost ready to break the historical price to below for possible breakdown in the future for example. If the price breaks support level at 17.868 to below on monthly close bar so the primary bearish trend to be resumed with the good possible breakdown on lower timeframes; alternatively, the price will be on secondary ranging for direction waiting for the high impacted news events.

AUS200 weekly price is on bullish ranging to be above Ichimoku loud. The price is located within bearish reversal support line at 8380 and resistance at 8886. Chinkou Span line of Ichimoku indicator is located to be near and above historical price to be ready for the possible bearish reversal in the future. Anyway, if the price breaks 8380 support to below on close weekly bar so the primary bearish reversal will be started, and if the price breaks resistance level at 8886 to above so the bullish trend will be continuing. Recommendation: bullish ranging within the levels; watch the price with s/r levels for possible buy or sell.

One of the most easy way to estimate the primary trend is 200 SMA. It means the following: if the price is located above 200 SMA so it means that the price is located in the bullish area of the chart; if the price is below 200 SMA so it should be considered as the primary bearish trend. For example, the DE40 weekly price is breaking resistance line at 24800 to above for the strong bullish trend to be continuing (with all SMA indicator's agreement with that). There are some particularities about how to estimate the secondary trend within the primary bearish/bullish which are related to the following: rising/declining 200 SMA line, and the combination of the other SMA indicators (100 SMA and 55 SMA) compare with the located of the price itself. But it may shortly be explained in the part #2.

XBRUSD weekly price is below 200 SMA in the bearish area of the chart. The descending triangle pattern was formed to the price for the bearish trend to be continuing. But Stochastics is indicating the oversold market condition so the bearish continuation is possible in case of some fundamental factors for WTI for example. If the price breaks support level at 58.55 to below so the bearish trend will be continuing. Alernatively, we will see the ranging up to the bear market rally (which also depends on the strong fundamental news events for example).

Weekly price is above 200 SMA on the bullish area of the chart. 100 SMA together with 55 SMS are indicator for the price the ranging market condition for trying to the primary bullish trend to be resumed. Ascending triangle pattern was formed, and if the price breaks resistance at 1.3534 to above so the bullish trend will be resumed. Alternatively, the price will be on secondary ranging within the primary bullish market condition. Recommendation: wait for the price to break 1.3534 resistance for possible buy position; otherwise - ranging.

W1 price is located far above Ichimoku cloud in the bullish area of the chart. The price was bounced from support level at 48,38 to above to the 83,98 level as the next possible target. Stochastic indicator is on overbought market condition so the strong bullish trend may be continuing with good fundamental news events only as a breakout for example. - If the price breaks resistance at 83,98 to above on close weekly bar so the strong bullish trend will be continuing. - Alternatively, the price will be on ranging up to the secondary correction with 48,38 as a next possible target for example. Recommendation: ranging; watch the price with watch the price resistance at 83,98 for possible buy position for breakout on strong fundamental news events, otherwise - ranging or correction as the counter trend.