Momentum in the Forex.
According to Sharefounders review, professionals can make good money at such moments, and beginners need to understand what a Forex impulse is, how to recognize it on the chart
The market movement is never quiet even if there is a strong trend. There are regular times when the price shows a sharp rise or fall in a short time, followed by a return to the original values. According to Sharefounders review, professionals can make good money at such moments, and beginners need to understand what a Forex impulse is, how to recognize it on the chart, and how to react correctly to avoid possible losses.
Momentum in the Forex.
What is the essence of Forex momentum? The reason for the impulse is a significant accumulation of open and pending orders (market volumes) at a certain price level. At the same time, the forces of buyers and sellers are approximately equal. This leads to a period of consolidation when the price moves within a narrow corridor until a large volume appears in one of the sides.
The entry of a large buyer causes a sharp increase and triggering a stop loss on the sale of small players, resulting in a strong upward momentum. In the opposite case, when sellers want to change the situation in their favor, we get a downward momentum.
Sharefounders review offers a separate look at what momentum is in Forex when strong fundamental events come out. In this case, the direction is determined only at the time of the news release and no technical analysis works. New trading is a separate group of strategies.
Momentum on the news.
The main feature of the impulse is the return of the price almost to the original level, which is quite natural. The stops of large players are several times larger than the average ones and even 100-150 points do not lead to the closing of the position, which is not true for most of the market crowd. When one of the parties has collected enough of its profit, it can leave the market and give the opportunity to compensate for losses and also earn. In the future, the price can go in any direction – both in the direction of the momentum and in the direction of correction.
Sharefounders review go to how to recognize momentum in Forex? To do this, remember that it is always preceded by an increase in volumes from both buyers and sellers. The beginning of a sharp movement can be considered the appearance of 1-2 candles in a row with a large body, and here the trader can choose one of two options: to trade in the direction of the price movement (at the level breakdown) or wait for its end and open a deal after the correction begins (at a false breakdown). Since the impulses occur near strong support and resistance levels, the main task is to find signs of the truth of its breakdown.
For example, when a trade is implemented to break the level (up), we can place a pending Buy Stop order above this level. Stop Loss is set at a distance of 15-20 points from the entry point (the main thing is that it is behind the level). Take Profit of 3 to 1 or 45 to 60 points.
After that, if there was an upward impulse, the price broke through the level and fixed above it, we remain in the position until the set goal. If the momentum does not start after the breakout, then most likely there will not be a sharp upward movement, so it is recommended to close such a deal. Also, after the price passes the distance of 2 * Stop Loss, we transfer the transaction to break even (for insurance).
Forex Impuls indicator – a tool for working with Forex impulses
The Forex Impuls indicator is one of the most popular free tools for trading Forex impulses. It is a modification of the MACD oscillator with additional smoothing.
The tool shows possible price reversal points, i.e. situations when a sharp movement in the opposite direction may occur. Of course, all this depends on where the chart is currently located (at its upper or lower point) or near what level the price is now, so it is important to take this into account.
This indicator does not have universal settings and in order to reduce the number of false signals, it is recommended to choose a period from an hour or more at which the Forex Impuls indicator gives more reliable signals, so it is more medium-term.
Summing up from Sharefounders review, you learned what momentum is in Forex and how it can be recognized on the chart. We also received information about the Forex Impuls momentum indicator, which can be used to better enter price reversals near levels or corrections.
Also, do not forget that one such tool is not enough for trading, so be sure to take into account Forex filters and conduct a parallel analysis that can give confirmation or an additional signal for the implementation of the transaction.