Forex encyclopedia

Wide-spread situation on the forex market is when movement of price on the chart takes place in a certain range, which is called Channel. Upon that, bottom boundary of this channel is called support line, because it supports the price from decline below the channel level whereas top boundary is called resistance line, because it resists the price leaping up the channel. The distance between those two lines constitutes trading range. Based on main direction of the price movement, channels are conditionally divided into uptrend, downtrend and range (side) channels.

Parabolic SAR is the technical indicator developed by Welles Wilder for analyzing trend movements. The first time it was announced in a famous book “ New Concepts in Technical Trading Systems” published in 1976. SAR stands for as “stop and reverse”. Parabolic SAR is one of a few indicators that signalize about closing of positions. In many respects Parabolic is similar to a moving average with the only difference that SAR can change position against price. Under ascending tendency, the indicator is drawn under prices (candles, bars), under descending tendency it is put above prices. When price crosses Parabolic line, reversal of the indicator takes place.