The Trend is Your Friend

I love reading technical analysis articles.  I find the
information obtained absolutely useful even if you don’t incorporate it
into your trading system.  With that said, there is a good article
detailing trend analysis with the Parabolic and DMI Indicators. 
The author give 3 real world examples of how it might be used to
identify the underlying trend.   I would definately recommend
reading it.  I have added the indicators to my trading system to
see how they perform.

Above
is the DMI indicator which shows 3 lines for the daily USD/JPY currency
pair.  Quite simply, when the DMI+ or DMI- cross up over one
another, a signal is generated.  If the DMI+ crosses up over the
DMI-, a buy signal is generated.  If the DMI- crosses up over the
DMI+, a sell signal is generated.  The ADX line confirms if the
pair is indeed in a trend.  A reading over 25 indicates that a
trend is in place.  A reading below 20 indicates that their is no
trend. 

The above graph shows that the USD/JPY is in a firm uptrend with the ADX line slowly increasing.  

Read the article to learn more, Make the Trend Your Friend In Forex . 

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