MACD Settings:- First EMA = 12 | Second EMA = 26 | Signal EMA = 9
Stochastic Settings:- Period = 5 | Average Period Fast = 7 | Average Period Full =7
Bollinger Bands Settings:- Average = 20 | Standard Deviation = 2
It has been sometimes since I updated this blog - so today we are going to continue technical analysis on the euro dollar pairs (eur-usd) again on the oanda historical fx platform. In all time frames from 1 minutes to the monthly we are seeing there is a strong uptrend with the monthly time frame to have the w formation or the head and shoulders reverse.
However the immediate terms (weekly time frame) - the trend is fluctuating which indicates potential corrections trend where it might fluctuates sideway. This is the result of overbought on the uptrend on the monthly time frame that exceed the upper line of the Bollinger bands. Therefore a correction is imminent in order to return the price position on its rightful path.
The sideway trend will be dictates by the 4 hourly timeframe - where technically when both the MACD and stochastic move in parallel the price will move accordingly and of course the MACD has a stronger effect although it maybe lag behind the stochastic. Not to forget support and resistant level where you can see it on the Bollinger bands lower / middle / upper bands.
I trade on the OANDA platform which I left many years ago because of it's bad charting - however after my returns it has improved so much and they have the new charting apps where it can open multiple charts in different time frames. This is better than buying multiple monitors to see all the time frames - which obviously free alternative to physical monitors of course.
Some useful chart features are the merging of more than 1 technical indicators on one window which making it easier to see the graphs simultaneously rather than having to analyze one by one. That increase the accuracy of technical indicator especially MACD and stochastic. These two indicators when they are moving in parallel it can be almost accurate especially when combined with Bollinger bands. What the Bollinger bands does is to see if the position at the bottom / middle or upper of the bands. And it is best to setup trade at the bottom and upper rather than the middle of the band and when MACD and Stochastic move in sync.
Here is the image of the monthly time frame. Where the uptrend movement pierced through the upper line of the Bollinger bands which indicate an overbought position. This signal there is high possibility of corrections will take place and indeed it is underway. Apart from that on the previous historical data also shows there was reverse head and shoulder formation or W on the monthly time frame indicates potential uptrend and this is supported by the upward movement of the MACD indicator.
On this short and medium terms - the uptrend stalled due to the overbought position and it's time for retracement. There is a potential sideway movement in the medium terms and dictates strongly by the 4 hourly and daily time frames. This may go on a few weeks before uptrend continuation.
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