Share
Go down
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Commodity Channel Index (CCI)

on Sat Jun 13, 2015 9:05 pm
Commodity Channel Index (CCI) measures the deviation of the commodity price from its average
statistical price. High values of the index point out that the price is unusually high being compared with the
average one, and low values show that the price is too low. In spite of its name, the CCI can be applied for
any financial instrument, and not only for the wares.
There are two basic techniques of using CCI:
• For finding the divergences.
The divergence appears when the price reaches a new maximum, and CCI can not grow above the previous
maximums. This classical divergence is normally followed by the price correction.
• As an indicator of overbuying/overselling.
CCI usually varies in the range of +/-100. Values above +100 inform about overbuying state (and about a
probability of correcting decay), and the values below 100 inform about the overselling state (and about a
probability of correcting increase).
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

DeMarker

on Sat Jun 13, 2015 9:06 pm
The DeMarker indicator registers the regions of price depletion which usually coincide with the peaks and
troughs of prices. The indicator varies between 0 and 1. When indicator is below the 0.3 point, the price turn
upward is to be expected. When the indicator is above 0.7, the price turn downward is to be expected.
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Elder-rays

on Sat Jun 13, 2015 9:08 pm
The Elder-rays combine the properties of trend following indicators and oscillators. They use exponential
moving average indicator (EMA, the best period is 13) as a tracing indicator. The oscillators reflect the
power of bulls and bears. To plot the Elder-rays three charts should be used: on one side, the price chart
and EMA will be plotted, on two other sides bulls power oscillator (Bulls Power) and bears power oscillator
(Bears Power) will be plotted.
Elder-rays are used both individually and together with other methods. If using them individually, one should
take into account that the EMA slope determines the trend movement, and position should be opened in its
direction. Bulls and bears power oscillators are applied for defining the moment of positions opening/closing.
The following positions should be opened:
• Buy, if:
1. there is an increasing trend (determined with the EMA movement);
2. the Bears Power oscillator is negative, but increasing at the same time;
3. the last peak of the Bulls Power oscillator is higher than the previous one;
4. the Bears Power oscillator increases after the Bulls divergence.
At the positive values of the Bears Power oscillator, it is better to keep back.
• Sell, if:
1. there is a decreasing trend (determined with the EMA movement);
2. the Bulls Power oscillator is positive, but decreases gradually;
3. the last trough of the Bulls Power oscillator is lower than the previous one;
4. the Bulls Power oscillator decreases leaving the Bears' divergence.
Do not open short positions when the Bulls Power oscillator is negative.
Divergence between the Bulls and Bears Power and prices is the best time for trading
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Envelopes

on Sat Jun 13, 2015 9:10 pm
The Envelopes are formed with two moving averages one of which is shifted upward and another one is
shifted downward. The selection of optimum relative number of band margins shifting is determined with the
market volatility: the higher the latter is, the stronger the shift is. Envelopes define the upper and the lower
margins of the price range.
• Signal to sell appears when the price reaches the upper margin of the band;
• Signal to buy appears when the price reaches the lower margin.

dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Force Index

on Sat Jun 13, 2015 9:11 pm
The Force Index was developed by Alexander Elder. This index measures the Bulls Power at each
increase, and the Bulls Power at each decrease. It connects the basic elements of market information: price
trend, its drops, and volumes of transactions. This index can be used as it is, but it is better to approximate it
with the help of moving average. Approximation with the help a short moving average (the author proposes
to use 2 intervals) contributes to finding the best opportunity to open and close positions. If the
approximations is made with long moving average (period 13), the index shows the tendencies and their
changes.
• It is better to buy when the forces become minus (fall below zero) in the period of indicator
increasing tendency;
• The force index signalizes the continuation of the increasing tendency when it increases to the new
peak;
• The signal to sell comes when the index becomes positive during the decreasing tendency;
• The force index signalizes the Bears Power and continuation of the decreasing tendency when the
index falls to the new trough.
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Ichimoku Kinko Hyo

on Sat Jun 13, 2015 9:13 pm
Ichimoku Kinko Hyo is predefined to characterize the market trend, support and opposition levels, and to
generate signals of buying and selling. This indicator works best at week and day charts.
When defining the dimension of parameters, four time intervals of different length are used. The values of
individual lines composing this indicator are based on these intervals:
• Tenkan-sen shows the average price value during the first time interval defined as the sum of
maximum and minimum within this time, divide by two.
• Kijun-sen shows the average price value during the second time interval.
• Senkou Span A shows the middle of the distance between two previous lines shifted forwards by
the value of the second time interval.
• Senkou Span B shows the average price value during the third time interval shifted forwards by
the value of the second time interval.

Chinkou Span shows the closing price of the current candle shifted backwards by the value of the second
time interval. The distance between the Senkou lines is hatched with another color and called 'cloud'. If the
price is between these lines, the market should be considered as non-trend, and then the cloud margins
form the support and opposition levels.

If the price is above the cloud, its upper line forms the first support
level, and the second line forms the second support level. If the price is below cloud, the lower line forms the
first opposition level, and the upper one forms the second level. If the "Chinkou Span" line traverses the
price chart in the bottom-up direction it is signal to buy. If the "Chinkou Span" line traverses the price chart in
the top-down direction it is signal to sell. "Kijun-sen" is used as an indicator of the market movement. If the
price is higher than this indicator, the prices will probably continue to increase. When the price traverses this
line the further trend changing is possible.

Another kind of using the "Kijun-sen" is giving signals. Signal to buy is generated when the "Tenkan-sen"
line traverses the "Kijun-sen" in the bottom-up direction. Top-down direction is the signal to sell. "Tenkansen"
is used as an indicator of the market trend. If this line increases or decreases, the trend exists. When it
goes horizontally, it means that the market has come into the channel.
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Moving Average Convergence/Divergence (MACD)

on Sat Jun 13, 2015 9:14 pm
Moving Average Convergence/Divergence (MACD) is the dynamic indicator following the tendency. It
shows the ratio between two moving averages of the price.
The MACD is developed as the difference between two exponential moving averages (EMA) having periods
of 12 and 26 days. To define the best opportunities for buying or selling clearly, the so called signal line will
be plotted in the MACD chart: it is the 9-days-moving-average of the indicator.
MACD is the most effective under conditions when the market swings with high amplitude in trading. The
most frequently used signals of MACD are intersections, overbuying/overselling states and divergences.
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Market Facilitation Index (BW MFI)

on Sat Jun 13, 2015 9:16 pm
tick. Absolute values of the indicator do not mean anything as they are, only indicator changes have sense.
Bill Williams emphasizes the interchanging of MFI and volume:
• MFI increases and volume increases – this points out that:
1. the number of players coming into the market increases (volume increases),
2. the new coming players open positions in the direction of bar development, i.e., the
movement has begun and picks up speed.
• MFI falls and volume falls. It means the market participants are not interested anymore.
• MFI increases, but the volume falls. It is most likely, that the market is not supported with the
volume from clients, and the price is changing due to traders' (brokers and dealers) "on the floor"
speculations.
• MFI falls, but the volume increases. This is the battle between bulls and bears where the volume
of buying and selling is large, but movements of the price itself are insignificant as a result of powers being
approximately equal. One of the fighting parties (buyers against sellers) will win. Usually, the break of such a
bar lets you know if this bar determines the continuation of the trend or annuls the trend. Bill Williams calls
such bar "curtsying".
dzonefx
Moderator
Number of messages : 582
Date of Entry : 2013-01-29

Momentum

on Sat Jun 13, 2015 9:17 pm
The Momentum indicator measures the value of the commodity price change during a certain period.
These are the basic methods of use this indicator:
• As an oscillator following the tendency, like MACD. In this case, the signal to buy appears if
the indicator makes trough and begins to grow; the signal to sell appears if it comes up to its peak and
turns downwards. To define the turning points of the indicator it is better to use its short moving average.
The extremely high or low values of the "Momentum" indicator presume that the current tendency will
continue. So, if the indicator reaches the extremely high values and then turns downwards, the coming price
increasing should be expected. But, in any case, one should not open/close position before the prices
confirm the signal of the indicator.
• As a leading indicator. This method is based on the presuming that the final phase of upward
tendency is usually accompanied with sheer price increase (since everybody believes that it will continue),
and the closing of the bears' market is usually accompanied with sheer fall in prices (since everybody seeks
after leaving the market). This happens very often in this way, but it is still a too sweeping generalization.
avatar
dzonefx
Moderator
Number of messages : 582
Points : 3337
Date of Entry : 2013-01-29
Year : 47
Residence Country Residence Country : Beograd

Money Flow Index (MFI)

on Sat Jun 13, 2015 9:19 pm
taken out of it. Forming and interpreting this indicator are similar to those of RSI, the only difference is that
the MFI takes volume into consideration, as well.
When analyzing the MFI the following should be taken into account:
• divergences between indicator and price movement. If prices increase and MFI falls (or vice
versa), the probability of price turning is very high.
• MFI values higher than 80 and lower than 20 signalizes respectively about potential peak or
foundation of the market.
avatar
dzonefx
Moderator
Number of messages : 582
Points : 3337
Date of Entry : 2013-01-29
Year : 47
Residence Country Residence Country : Beograd

Moving Average (MA)

on Sat Jun 13, 2015 9:20 pm
The Moving Average (MA) indicator is the most frequently used indicator in technical analysis. The moving
average line will be plotted directly in the price movement chart. The moving average is calculated with a
certain predefined period. The shorter the period is, the higher the probability of false signals is. The longer
the period is, the weaker the sensibility of the moving average is.
Moving average variants:
• Simple Moving Average;
• Exponential Moving Average;
• Smoothed Moving Average;
• Linear Weighted Moving Average.
avatar
dzonefx
Moderator
Number of messages : 582
Points : 3337
Date of Entry : 2013-01-29
Year : 47
Residence Country Residence Country : Beograd

Moving Average of Oscillator

on Sat Jun 13, 2015 9:21 pm
Moving Average of Oscillator is, in general case, the difference between the oscillator and the smoothing
of oscillator. In this case, the basic line of MACD is used as an oscillator, and the signal line of MACD is
used for smoothing.
avatar
dzonefx
Moderator
Number of messages : 582
Points : 3337
Date of Entry : 2013-01-29
Year : 47
Residence Country Residence Country : Beograd

On Balance Volume (OBV)

on Sat Jun 13, 2015 9:23 pm
On Balance Volume (OBV) indicator connects the volume and the price change accompanying the given
volume. The sense of this indicator, developed by Josef Granville, is simple. If the closing price of the
current bar is higher than that of the previous bar, the value of the volume of the current bar will be added to
the previous value of OBV, if the closing price of the current bar is lower than that of the previous bar, the
volume will be taken from the previous value of OBV.

Signals given by OBV are better to be used as confirming, these signals are more likely secondary in the
importance being compared with those of oscillators or tendency indicators, though, nevertheless, OBV like
oscillators gives a strong signal of turn at the divergence with the price. Moreover, the increase of OBV up to
a new maximum or its decrease to the new minimum confirm the power of bulls or bears and gives the
signal of increase or decrease respectively.
avatar
dzonefx
Moderator
Number of messages : 582
Points : 3337
Date of Entry : 2013-01-29
Year : 47
Residence Country Residence Country : Beograd

Parabolic SAR

on Sat Jun 13, 2015 9:24 pm
The Parabolic SAR indicator is plotted on the price chart. This indicator is similar to moving average in its
sense, but the difference is that the "Parabolic SAR" moves with much more acceleration. This indicator is
often used as a line of moving stop-signal.

The Parabolic SAR defines the points at which one should leave the market excellently. Long positions
should be closed when the price falls below SAR line, and the short ones should be closed when the price
increases above SAR line.

If you have a long position opened (i.e., the price is above SAR line), the SAR line will move upwards
independent on that in which direction the prices move. The value of the SAR line shift depends on the value
of price movement.
Sponsored content

Re: Expert Advisors

Back to top
Permissions in this forum:
You cannot reply to topics in this forum