8 Popular Intraday Trading Indicators (And How to Use Them)
Intraday Trading Indicators help place successful short-term trade orders in the forex market. The indicators help identify strong market momentum, based on which you can make better trading decisions. In this article, we take a deep dive into the top eight Intraday Trading Indicators that you can apply in your forex trading.
What are Intraday Trading Indicators?
Intraday Trading Indicators help identify market trends by combining the current and historical price information of currency pairs. These indicators are represented by lines and bars on the price chart. With the help of these charts, traders can identify the ideal exit or entry price levels accordingly.
Top eight Intraday Trading Indicators
1. Moving averages
Moving average (MA) is an indicator that takes the average of the currency pair prices over a long period of time and provides traders with current market trends. The averaging out helps remove irrelevant and minor price fluctuations from the calculation, enabling traders to identify the price patterns more easily and clearly.
- When the current currency pair price is near the moving average price, it signals strong market trend and signals them to long the trades
- When the currency pair price is far from the moving average price, it indicates volatility in the market and signals traders to exit the market or short the trade
2. Stochastics
The Stochastic indicator helps traders identify the market trend reversals. It compares the previous closing price of a currency pair to the range of prices it has been trading in for the last few days to indicate market momentum.
- When the Stochastic indicator shows a reading above 80, it indicates an overbought market condition and signals traders to exit or short the trade due to an unexpected market downtrend
- When the Stochastic indicator shows a reading below 20, it indicates an oversold market condition and signals traders to enter the trade due to an unexpected market uptrend
3. Donchian
The Donchian indicator helps intraday traders identify bearish and bullish reversal signals. It provides ideal entry and exit price points by comparing the highest price value, lowest price value and the average price value in the trending market. It consists of three bands, namely –
- The upper band that indicates the highest currency pair price
- The lower band that indicates the lowest currency pair price
- The middle band that indicates the average currency pair price
The area between the upper band and lower band is known as the Donchian channel.
- The current currency pair price moving beyond the middle band of the channel indicates a market uptrend and signals traders to enter the market and take long positions
- The current currency pair price falling below the middle band of the channel indicates a market downtrend and signals traders to exit the market or short the positions
4. Average directional index
The Average directional index (ADX) indicates the strength or weakness of an ongoing market trend. The trend’s strength is measured by taking the average of the currency price range values that ranges between 0 to 100. The higher the value of the ADX, the stronger the ongoing trend.
- When the ADX goes beyond the value of 75, it indicates a strong trend, signaling traders to enter markets during an uptrend and exit markets during a downtrend
- When the ADX falls below the value of 25, it indicates a weak trend, signaling traders to enter markets during a downtrend and exit markets during an uptrend
5. Bollinger bands
Bollinger bands help traders identify the ideal price level to enter to exit a trade by signaling them about overbought or oversold market conditions. It consists of three lines, an upper band indicating the high price of the currency pair, a lower band indicating the low price of the currency pair and a middle band which is the simple moving average of the currency pair. The upper and lower bands are placed two standard deviations above and below the middle band to identify current strong market sentiment.
- When the currency pair price drops near to or below the lower band, it indicates a downtrend and signals traders to exit or short the trade
- When the currency pair price trades near or above the upper band, it indicates an uptrend and signals traders to enter or long the trade
6. Relative strength index
The Relative strength index (RSI) is a momentum indicator that helps identify overbought and oversold market conditions by providing them with the resistance and support prices.
- The resistance price is where the currency pair prices stop increasing and start falling
- The support price is where the currency pair prices stop decreasing and start increasing
The RSI always ranges between 0 to 100. The lower the value, the more oversold the market and the higher the value, the more overbought the market.
- When the RSI value touches or moves beyond 70, it indicates an uptrend and signals traders to place buy orders
- When the RSI value touches or moves below 30, it indicates a downtrend and signals traders to place sell orders
7. Moving average convergence divergence
Moving average convergence divergence (MACD) is a technical indicator that helps traders identify bullish and bearish markets. The indicator helps traders identify entry and exit price levels in the market by providing them with strong bullish or bearish signals. It is represented as a trend line that shows the relationship between a fast (short-term) moving average and a slow (long-term) moving average. The slow-moving average is subtracted from the fast-moving average to compute the MACD line. It also comprises a centre line (zero line), dividing the chart area into bullish and bearish momentum.
- When the MACD line crosses above the centerline, it indicates a bullish market trend and signals traders to place buy orders
- When the MACD line crosses below the centerline, it indicates a bearish market trend and signals traders to place sell orders
8. SuperTrend
The SuperTrend indicator provides traders with buying and selling signals in a strong trending market. It is a color-changing indicator that is plotted above or below the currency pair’s closing prices.
- When the SuperTrend indicator falls below the currency pair closing price, it turns green and signals traders to enter or buy the trade due to the strong uptrend
- When the SuperTrend indicator moves beyond the currency pair closing price, it turns red and signals traders to exit or short the trade due to the strong downtrend
Use the above indicators for successful intraday trading
The above popular Intraday Trading Indicators helps traders with market trends, momentum, entry and exit signals that assist them to trade successfully. Start trading with Blueberry Markets today to enjoy competitive spreads and transparent trading environments. Sign up for a live trading account or try a risk-free demo account on Blueberry Markets.
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