Archive for 'Technical Indicators'
Technical Indicators – Momentum
Posted on31. Jul, 2007 by admin.
Momentum measures the rate of change of the currency pair.
Momentum = V – Vn
Where
V = latest closing price
Vn = closing price n periods ago
If there is no change of closing price, momentum equals to 0, which is the central line of the indicator. When there is a rise of price, momentum is greater than 0. [...]
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Technical Indicators – Relative Strength Index (RSI)
Posted on31. Jul, 2007 by admin.
Relative Strength Index (RSI) measures the strength of all upward movement against the strength of all downward movement in a specified time frame.
For mathematical formula of RSI is as follow:
RSI = 100 – [100/(1+RS)]
RS = average of n day’s up closes / average of n day’s down closes
The most common parameter for RSI is period [...]
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Technical Indicators – Moving Average Convergence Divergence (MACD)
Posted on31. Jul, 2007 by admin.
Moving Average Convergence Divergence (MACD) shows the difference of two moving averages – EMA12 and EMA26, and a 9-day EMA of the difference is plotted against it to trigger buy or sell signal.
There are three parameters in MACD:
MACD line – the difference between the 12 and 26 period EMA
Signal line – the 9 day EMA [...]
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Technical Indicators – Moving Average Envelopes
Posted on31. Jul, 2007 by admin.
The moving average envelope is a variant application to the moving average. It is a trading band composed of two moving averages, which attempts to determine the range of market should be trading in. Traders can choose their period of MA, then form the upper line of the envelope by shifting the MA upwards and [...]
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Technical Indicators – Bollinger Bands
Posted on31. Jul, 2007 by admin.
Bollinger bands were created by John Bollinger in the early 1980s. The bands have similar theory and application with the Moving Average Envelopes. It has a set of three curves, the typical parameters are:
Middle Bollinger Band = 20-period simple moving average
Upper Bollinger Band = Middle Bollinger Band + 2 * 20-period standard deviation
Lower Bollinger Band [...]
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Technical Indicators – Moving Averages
Posted on31. Jul, 2007 by admin.
What is moving average?
Moving average is the average rate of a currency pair over a set period. For example, if you conduct a 20-day moving average (20 day MA), you simply add the close price of the past 20 days and divide it by 20. This is called a simple moving average (SMA).
The most common [...]
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Technical Indicators – Introduction
Posted on31. Jul, 2007 by admin.
Technical indicators are statistics of past market data base on different mathematical calculations. Traders use technical indicators extensively in technical analysis to predict the continuance and the reversals in currency trends.
There are two major types of technical indicators: trend following indicators and oscillators.
Trend following indicators reflect the direction and the strength of the current trend. [...]
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Determining the RSI range
Posted on26. Mar, 2007 by admin.
An up trending market will typically find support at the 40 level, with effective resistance at the 80 level. A down trending market will find resistance at 60, with effective support at the 20 level. Often times a primary indication that the trend has shifted from a bear trend to a possible bull market occurs [...]
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The Bullish Hidden Divergence
Posted on26. Mar, 2007 by admin.
In a bullish hidden divergence, the indicator makes a lower low, but price makes either a higher low or a double-bottom low. This type of nonconfirmation occurs mainly during corrective declines in an uptrend, but it may also be found on occasion at price retests of the lows. Bullish hidden divergence indicate underlying strength in [...]
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Classic divergence
Posted on26. Mar, 2007 by admin.
Classic divergence is one of the best-known types of nonconfirmation. A divergence is a separation between price and indicator that warns of a possible short- to intermediateterm change of trend. A bullish divergence arises during a down move when price makes either a lower low or a double bottom but the indicator makes a higher [...]
