Combining Bollinger Bands, the average directional index, and Fibonacci retracement on currency pairs

A pair as one plotted series

A currency pair can be plotted as one candlestick series and read with the same moving-average, band, and directional overlays used on an equity chart.

The first symbol in a pair is the base being traded and the second is the cross. A weaker dollar versus the euro is expressed by buying the euro-dollar pair.

What the illustrated chart stacks

The illustrated pair chart stacks seven- and eighteen-bar simple moving averages, Bollinger Bands, and a parabolic stop on price, with stochastics, directional movement, and the average directional index in a lower pane.

Narrowing of Bollinger Bands on a currency pair is treated as a condition expected to be followed by a sharp move higher or lower. An average directional index reading of 25 or higher is used as a check that the pair is in a strong move, independent of direction.

Fibonacci retracement and similar line studies are applied on a stripped candlestick-and-band chart so the geometry remains readable.

Checking the combination on the chart

Hover readouts of the percent-K versus percent-D gap, the plus-minus directional-movement gap, and whether the average directional index is at or above 25 are used so the combination can be checked without leaving the chart.

Pips, the spread, and the session boundary

Price change is counted in pips, defined as the last decimal place of the quote, so a rise from 1.2845 to 1.2850 is five pips.

The spread, the executable gap between the sell (bid) and buy (ask) quotes, is presented as the sole explicit entry cost, with a small interest charge if a position remains open past the 5 pm ET session boundary.