Moderate overbought occurs when the indicator is in the overbought zone less than 5 bars. https://www.bigshotrading.info/ Extreme overbought occurs when the indicator is in the overbought zone more than 5 bars.
Forex data can be compared to fuel and software that uses this data is like an engine. During the speculation, the DeMarker indicator also reacts «nervously», like most oscillators. This DeMarker indicator’s signal is considered to be strongest. The OBV indicator is based on the idea that both the volume and the price activity are equally important.
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- Your actual trading may result in losses as no trading system is guaranteed.
- Here we have a USD/JPY daily chart that trades in a downtrend as the price action has been creating a series of the lower highs and lower lows.
- This means the bears are accumulating strength, and a reversal downwards may follow.
- All information on The Forex Geek website is for educational purposes only and is not intended to provide financial advice.
- DeMMAX is a value derived from comparing the maximum value for the current bar to the maximum value of the previous bar over “n” periods.
// DeMarker should be interpreted as other overbought / oversold indicators such as RSI with the levels of 30 and 70. The signal forms when the local highs/lows of the price chart diverge with the corresponding highs/lows of the indicator. If the indicator line is declining, forming local lows on the chart, there is a downtrend and an oversold state of the market. Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading!
What Is the DeMarker Indicator?
In the example above, the De Marker indicator is combined with other indicators, namely Moving Average. However, the success rate of a combination of forex indicators is not a tool to achieve 100% profit, but it also depends on your patience and money management in trading. Do not buy or sell if the price has reached the overbought or oversold area of DeMarker but has not crossed the 14 SMA so it cannot be confirmed whether the buy or sell signals. We explained how to combine signals from three indicators, study the intricacies of the procedure, and understand the rules for opening and closing positions. Trading on the demarker trend lines – first, reference points are determined, and a trend line is built, and then the search for optimal moments for concluding deals is carried out. In this case, the indicator will become more sensitive to price movements. Accordingly, the chance of generating false signals will proportionally increase.
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