Volatility describes the day-to-day movement in prices (up or down). The theory is that a change in volatility tends to lead to a change in price.
For example: Bollinger Bands are volatility indicators and if the price touches or penetrates either band, it could indicate a price reversal. The distance (or gap) between the upper and lower bands indicates the volatility level – the wider the gap, the higher the volatility.
|Volatility Indicators||Useful in Forex?|
|Chikou Span, Senkou Span, Tenkan Sen, Kijun Sen (Ichimoku)||Yes|
|Day Open Close||Yes|
|Fibonacci Arcs, Fans, Retracements||Yes|
|Gann Lines, Fans, Grids||Yes|
|Linear Regression Channel||Yes|
|Linear Regression Trendline||No|
|Speed Resistance Lines||No|
There are many factors that affect exchange rates of currencies. However some are more important in currency trading than others. These are; Interest and Inflation rates, Trade balance, Currency market speculation, Foreign investment and Central bank market intervention. Learn how to use these factors in your forex tra ...