Technical analysis 3

                            Technical analysis 3

This type of analysis is based on technical indicators:

3) Technical indicators


A) trend indicators

Trend indicators also called unbounded indicators which are those where overbought and oversold areas are not present, and which is characterized by their advantages of providing significant reversal signals in directional markets. we also find the notion of divergences.
These are mainly moving averages and the MACD.

a) Moving averages

Indicator very use by analysts because simple of use and interpretation,
it helps to determine a trend but can be very useful to enter position at to define an exit point. The use of these indicators can be done on any unit of timethe moving average and speaks to an indicator reflecting the average valuation over a given period




b) MACD
the match is an indicator which addition of exponential moving average in general using an exponential moving average of 2 days and another at 26 days it is calculated and graphically represented also called line of MACD. The interpretation of the MACD is done in two ways.

* crosses:

During a cross between the 12-day moving average and that of 26 days the MACD gives a sign in purchase when the moving average runs, that is to say that of 2 days passes over the tongue c that is to say that of 26 days and vice versa

* Discrepancies:

A divergence is observed when the price of the security and the MACD diverge, or move in the opposite direction. The divergence will be bearish when we observe an upward tilt on the price and a downward tilt on the MACD. this is generally consistent with a downward reversal. The divergence will be bullish when we observe a downward tilt on the price and an upward tilt on the MACD. This is generally consistent with an upward reversal.




B) force indicators

the DMI (directional movement index) is a previously detected movement power informant. It is the best complement to the indicators seen recently.
The DMI consists of 3 curves. The DI + which indicates the upward movement, the DI- which indicates the downward movement. and finally the ADX which measures the force of the movement. If the strength of the 12-day movement exceeds 23, this means that the trend is strong, and not significant when it is below 20.

C) the Oscillators

The Momentum

The study of Momentum is done in two parts:
- study of the indicator alone
- the comparison between the indicator and the price of the security

Study of the indicator:

It signals a potential bearish reversal if:
- It is high and it turns down
- It is positive and goes back below level 0

it signals a potential upside reversal if:
- It is low and it is turning upwards
- It is negative and goes back above level 0

Study of the indicator and the course:

the divergence will be downward when we observe an upward slope on the price and a downward slope on the Momentum


The divergence will be bullish when we observe a downward slope on the price and an upward slope on the MACD

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