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Technical indicators in the technical analysis of financial markets
08-01-2018 | No Views : 369
Technical indicators in the technical analysis is one of the important tools on which the technical analyst to predict the future movement of prices, as they work on mathematical equations reflect whether the price in the case of saturation or still in motion.
Technical indicators are divided into more than one category. Here we will discuss the two categories of technical indicators in the technical analysis. These are trend indicators and oscillators. Many technical analysts and traders depend on the two types. .
The trend indicators give good results in the case of a clear direction of the price of the stock on the graph, while oscillators work well in the case of the movement of prices, and oscillators can be used to see the potential of price reflection and determine the saturation of the purchase and the saturation of selling prices.
OscillatorsHere we will discuss the oscillators in the technical indicators in the technical analysis, which reflect whether the price has reached saturation and is used to determine the reversal of the trend when the emergence of a price break between the price movement and the movement of the index.
The oscillators we will address in this lesson are as follows:
- RSI - Relative Strength Index.
- Stochastic Index.
- Momentum Momentum.
MACDMACD is one of the most famous technical indicators in technical analysis used by many technical analysts and traders. It is also one of the oldest technical indicators. It was invented in 1981.
Configure the MACD indicatorMACD is the abbreviation of the Moving Average Convergence Divergence. The index consists of the 12-day exponential moving average (EMA 12) which is called the faster MOVE than the 26-day exponential moving average (EMA 26) MACD Line.
Also, when taking the simple nine-day SMA 9 for the MACD line, it produces another line called Signal Line.
Ascending and bearish signals for MACDAfter we talked about the composition of the MACD index we will deal with signs of the rise and fall of the index, as we mentioned above that it is one of the most famous technical indicators in technical analysis by traders and analysts technical.
MACD Line Negative Interchange with Signal LineThe MACD line crosses with the Signal line, and the MACD line below the second line is a negative sign indicating that a buy saturation might cause price stability or decline.
MACD Line Negative Interchange with Zero LineAnother negative sign for the MACD, the MACD line break and break of the zero line down, is a sign that the downside potential is the biggest.
Negative DivergenceThe negative price divergence consists of the completion of a peak above the top of the price, and in contrast to a summit below the top of the MACD index, which indicates the imbalance of liquidity, which is a sign of approaching the reversal of price, and this form of price deflation and we will address the full price break in a separate lesson for him Of trading features.
Positive intersection of the MACD line with the Signal lineMACD line breaks the MAC line and the MACD line is above the second line, a positive signal indicates that there is a bullish saturation that may cause price stability or bullishness.
MACD Line Interaction with Zero LineAnother positive sign for the index, the rise of the MACD line and the breach of the central line to the top, is a sign that the downside potential is the biggest.
Positive DivergenceThe negative price divergence appears at the bottom of a bottom lower than the price, and opposite the bottom of the MACD, indicating a liquidity imbalance which is a sign that the trend is changing and the price is rising. As mentioned above, this is a form of price break. A separate lesson from studying technical indicators in technical analysis.
Dear reader, we have finished MACD the first indicator of technical indicators studied in the technical analysis, but remember that like the rest of the tools in the technical analysis can not be relied upon alone, but a good tool put them beside your other tools to reach the best expectations for the movement of the price of the future.
RSI -Relative Strength IndexThe index of strength ratio is another one of the oscillators we will address in the study of technical indicators of negative analysis, as it is also a reliable indicator of many technical analysts and speculators in the financial markets, because it is easy to read and extract the data needed for the analyst needed in Expect future price movement.
The relativistic price index is based on the closing prices which have been increased and divided by the average closing prices, which were reduced by a mathematical equation for a specified period. The index was first introduced in 1978.
RSI equationRelative Strength Index = 100 - 100/1 + Relative Strength
Relative Strength = Average closing prices at a high level of "X" days / average closing prices at a low level of "X" days.
How to use RSI and use it in technical analysisBefore we mention the RSI reading, let's first identify the levels used, as the index basically measures saturation levels when the price reaches certain levels in the index.
The levels used to read the RSILevel 30
If the price reaches the level of 70, it is a sign that prices have reached a saturation level. If the price falls to the level of 30, it will be a sign that prices have reached a saturation level and that the bearish movement is approaching.
As the movement of the index above the level of 50 reflects the positive prices, and vice versa with the price movement below the level of 50 be a reference to negative prices.
RSI bearish signals
- The index reached the saturation level 70 and the reversal of it, as the index reached the level of 70 and continued in the mean that there is still pressure from buyers, despite the arrival of the price to saturation.
- The rise of the index to break through level 50 will be a signal to positive prices.
- The index reached the level of saturation 30 and the reflection of it to the top, pointing to the arrival of the price of the stage of saturation of the sale and approaching Ascension.
- The drop of the index and breaking it to the 50 level indicates negative prices.
RSI can also be used to extract the Divergence divergence from the chart.
Dear reader, we have completed the first part of the study of technical indicators for the technical analysis of financial markets. In the next lesson we will address the other technical indicators that you can use in technical analysis to reach the best results.
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