Moving Averages
Moving averages are one of the oldest technical analysis techniques and the most widespread, and are mainly used as a tool to hunt down trend (Trend Following).
Type Indicator: directional indicators (Trend Indicators).
Moving averages are calculated for the average price movement in a specified period of time, where a set of data taken price for a specified period (such as closing prices, for example) and combine these prices and divided by the number is produced of which the number is the moving average.
There are more than one type of moving averages and best known are:
SMA (Simple Moving Average) or (SMA).
EMA (Exponential Moving Average) or (EMA).
SMA (Simple Moving Average):
Is an average of the prices in a specified period of time, and can be calculated on the basis of the closing prices of the opening or minimum and maximum price, but preferably calculated on the closing prices due to its importance.
To calculate the simple moving average closing prices are taken for a certain period (50 days for example) then these prices are collected and divided by the period (50).
In general, all you have to do is choose the time period for the moving average in the graphics program you have, the average will be listed on the chart automatically.
EMA (Exponential Moving Average):
Because moving averages delayed largely on the price movement, analysts sometimes used the exponential moving average, which gives more importance to modern rates through a set of equations to overcome delays in the movement of the Mediterranean.
It should be noted that the difference between the two averages is not very large, but the average exponential closer to the price movement for the simple average, there are analysts prefer to use average exponential on the grounds that its signals faster and more compatible with the price, and there are those who prefer the simple average on the grounds that his references more credibility and does not give a lot of false signals such as the exponential average.
And use any of them in general should be based on the extent of the market reaction to the average user, if the simple average of the best performance with an average price of exponential you can to use Simple Almtosatt. And vice versa.
Uses moving averages:
1 - break the moving average price.
Is used to break the price moving average as a signal to buy and sell, when breaking the moving average price of the top of the signal to buy, and vice versa in the case of breakage down be a sell signal, note the following example:
It is noted that the longer moving average, the lower and increased accuracy of signals and vice versa in the averages with a short duration, and longer-month averages, which are used for this purpose, 20, 50, 89, 150 and 200
2 - a medium-sized moving averages cross.
You can use the intersection medium-sized moving averages to generate buy and sell signals are as follows:
Buy signals: when intersects the average short-term with the long-term average is higher.
Selling signals: when intersects the average short-term with the long-term average down.
The month averages, which are used for this purpose are (5, 20) and (10, 50), note the following example:
3 - the intersection of three moving averages:
You can use the intersection of three moving averages to generate buy and sell signals, the most famous applications use intersection of averages (5, 10, 20).
Buy signals: the intersection of 5 with 10 of the top, then the intersection of 10 with 20 of the top so that it is the most advanced is 5 followed by 10 and then 20.
Selling signals: the intersection of 5 with 10 down, then the intersection of 10 with 20 down so that it is the most advanced is 20 followed by 10 and 5, note the following example:
Bollinger Bands
Mitaker Indicator:
Creator of the index is "John Bollinger" (John Bollinger) at the beginning of the eighties, and was "Bollinger" has built assumption is that the market is in constant motion and remains constant and therefore must be a support and resistance levels moving besieging the price and can predict areas rebound rather than levels fixed .
Type cursor: pointer as it is directional indicators to measure market liquidity.
The index consists of:
Min Middle: It is a simple moving average.
Min loft: a positive standard deviation for the simple average.
Lower limit: a standard deviation negative for the simple average.
The default settings of the index used by the "John Bollinger" are:
Simple average 20
Positive standard deviation (2).
Standard deviation Negative (2 -).
Take advantage of the Bollinger lines:
1 - Using Bollinger as an indicator of the degree of price volatility (Volatility):
Lines Bollinger shows dramatically degrees of price volatility in the market if the lines are moving in the scope of accidental tight, it means that there is a weakness in the degree of price volatility, and is often followed by the movement of forming strong in one direction, so you should be careful if you find the index moving in a narrow range and must that is preparing for a strong movement in one direction, and technical gadgets used to enter with their direction.
Note the strong movement after the narrow limits of the index.
In the case of a high degree of price volatility, the distance between the borders of the index increases, and the price has reached the peak of the movement and then more likely to reflection, and reflection areas unpredictable combining Bollinger borders with momentum indicators.
2 - Using Bollinger lines as targets.
Although you can be considered the upper limit of the index as a resistance and the bottom as support and use it as a point to enter the trades, but it is preferably used as targets and not be relied upon as a point of entry in order to avoid signals false, you can rely on access to break the limit East (simple average) and the goal after breaking either the upper or the bottom as the example below:
Momentum
Type Indicator:
Momentum indicator.
The idea of the index and how to use it:
● is a technical indicator measures the rate of change (momentum) in the movement of prices, if the trading range for a given time period is higher than in the period of time the former is considered that an increase in the rate of change (momentum) and then index to rise, and vice versa If the trading range for the time period less the scope of the previous time period is considered that a decrease in the rate of change (momentum) This leads to a lower reading on the index.
● due to the method of calculating the index (rate of change) is the commander of the price index. For example, if the price moves of 2 to 6 to 9 to 11, this rise in price but lower change rate (loss of momentum), and this leads to the reflection of the momentum indicators before the actual reflection of the price.
● momentum indicators work perfectly when the market is moving sideways and fail to anticipate the reversal points when the market price in the case of directional movement.
● up to momentum indicators overbought condition when they reach a high level compared to previous peaks and this means that the market is ready for landing.
● up oversold condition when they arrive to a low level compared to previous Bakien and this means that the market is ready to rise.
Note:
Momentum oscillator is the same index rate of change (Rate of change), but differs from the halfway line instead of the zero line in the rate of change becomes 100 in the momentum indicator that the different calculation method.
As is evident, the indicators reflect the same thing, but the Central Line (Central Line) in the index (Momentum 100) In a sign (ROC) and this is due to the difference in the way the self-employed.
The objective of the index:
- In the directional movement
Buy when the trend is to the upside and down cursor down the center line and back to the top of glory. And vice versa
2 - to break the trend line
- Break the uptrend line on the index often Maysbak a real shift on the price
- Breaking the downward trend line on the index always Maysbak the real transformation on price
MACD Histogram-OSMA
Innovative index:
Gerald Apple (Gerald Appel)
Type Indicator:
Momentum indicator.
The idea of the index:
The idea of the index is not only confined to measure the strength of (bulls or bears) and dominating the market, but also determines its value by this control if the increase or decrease.
An indicator subtracting the signal line (Signal line) of the line (MACD line)
MACD Histogram = MACD line - Signal line
And the representation of the output in the form of statistical columns called (Histogram)
The modus operandi of the cursor
1 - the direction of the columns:
When moving columns to the top (mile columns to the top) and increases in length it indicates the upward trend and the opportunity to buy (vice for sale).
2 - a contrast between the index and price:
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