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McGinley Dynamic Forex Technical Analysis and McGinley Dynamic Forex Trading Signals

Developed by John McGinley

 

McGinley Dynamic aims to overcome the lag of the traditional simple and exponential moving averages, the indicator automatically adjusting itself relative to the speed of the Forex market. Thus its name, dynamic.

 

The indicator follows price movements closely in both a fast and a slow moving Forex market.

McGinley Dynamic Technical Indicator

 

 

Forex Technical Analysis and Generating Forex Trading Signals

 

This indicator is better at avoiding whipsaws compared to the original moving average.

 

 

Calculated using the formula:

 

Dynamic = D1 + (Price - D1) / (N * (Price/D1)^4)

 

D1 = previous value of Dynamic indicator

N = smoothing factor (of price periods)

^ = Power of

 

Bullish, Buy Signals and Bearish, Sell Signals

 

McGinley Dynamic should be combined with moving averages to form a Forex trading system. McGinley Dynamic should be used as the smoothing mechanisms where the moving average is choppy or ranging.

 

  • Bullish, Buy Signal - A buy signal is generated when price is crosses above the indicator.
  • Bearish, Sell Signal - A sell signal is generated when price is crosses below the indicator.

Technical Analysis of McGinley Dynamic Technical Indicator

Technical Analysis

Market Sentiment: Did you know that traders and market participants have been buying US Dollars because USD is the best currency to hold when there is a recession – this is because the dollar is held as the reserve currency by most central banks and during recession most traders also prefer to hold this currency, this is why USD is known as a safe haven currency. But now the market sentiment has changed and all the economies are on their way to recovery and most have even returned to economic growth based on the economic reports coming from these countries.

During times of economic growth traders prefer to sell the dollars they had bought and start buying higher yielding currencies. These higher yielding currencies include EURO and Great Britain Pound. This is why the Euro is starting to appreciate against the USD. The EURUSD is trending upwards; Crude Oil Prices have also started to move back up because demand of oil is growing because of the global economic growth, Gold is also in an upward trend because during economic growth the prices of commodities also go up because there is increase in their demand.

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