Forex Technical Analysis: Trend potential

For example, we've opened a trade for sales. Everything is fine. Suddenly, the price reverses (which is usual). And you start to think about the questions described above. If price just goes through correction - never mind. But what if it means what tendency has changed? Because of it you may miss either short receive your profit. Or just burn a few million of neurons. One of standard indicators - ADX - handles this issue perfectly. And with the help of this very indicator we will determine current state of the trend and its potential. We'll omit description of the indicator per se - doing that on your own is simple. From three curves used in this indicator, we will be interested in just one line - ADX. Its properties are simple: trend has its best potential, if ADX line grows from bottom to top. In case of reversal from top to bottom, ADX tells about correction. The signal gets stronger, when line crosses extreme points. Direction of movement will be defined by us with the help of RSI oscillator. Bollinger bands and its major levels will tell us about target moves. Let's turn to the example:

We'll choose any four conditional prices of an active status of price and will check, how indicators behaved before this growth. It is clear that the bottom one (ADX) started to grow, RSI prompted about the direction correctly. That is the method we will use for our task. Bollinger bands are another method we will apply to search for acceptable entry and exit points. One of their properties is movement of price within upper and bottom bands and bottom moving nabd. All that will help us to estimate trend and forecast market events for our instruments.