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Friday, September 23, 2011

TECHNICAL analysis

Moving average convergence divergence (MACD)
Created by Gerald Appel MACD and take the actual formulation is similar to moving average, this indicator is used to identify the possibility of a trend and oscillators to determine when the trend is over-Bought or over-sold, this indicator consists of two parts: the MACD histogram and MACD lines itself, in line, MACD is divided into 3 parts: a trigger line, center line, and the MACD line
• MACD line, by default the formulation of the MACD line is: XMA12-XMA26 namely the difference of    period 12 with XMA XMA periode26, therefore using XMA, the nature of the MACD is also mimic features of XMA, which gives the signal earlier than the other MA
• TRIGGER line is a line which by default is actually XMA9
• CENTER line is common line, a line of zero that is limiting the negative histogram with histogram positive
Histogram = formulation for the histogram are: MACD line, the trigger line is used as an indication Over Bought / Over sold
Table MACD application to predict the direction of the trend:
• MACD trigger line cut line, from below, the transition towards the bullish trend
• MACD trigger line cut line, from above, the transition towards a bearish trend
• MACD line and the trigger line is above the center line (positive area) means: long bullish trend
• MACD trigger line and the line is under the center line (positive area) means: long bearish trend
• Histogram of positive / negative = condition Bought Over / over-sold
• Positive Divergence = prices will come to move up
• Negative Divergence = move down the price will go
Linear regression (LR)
In the history of mathematics of linear regression (linear regression) was first developed by a mathematician Gauss in 1809, and Gilbert Raff use these principles to trading shares first, the concept of inflation used to calculate the price of basic material needs, it can be used to measure the trend price based on a graph, Gilbert Raff said, using the regression channel to calculate accurately the price movements of stocks, bonds, mutual funds, and commodities
Linear regression indicator is useful for:
• Predicting future prices, based on current prices
• Determining the price trend, which is easily applied when LR penetrate from below and above the price, there will be a bullish (trend up)
• Determinants of support and resistance
Linear regression (LR)
is a technical indicator to predict future prices from past data, and is usually used when the price increase or decrease significantly, the concept of a linear regression of the same when we use the moving average (MA) period 1, because the linear regression using the method The same with moving averages, because it possessed in common the same method is also its function, but the way the calculations using statistical methods, each point is illustrated the linear regression indicator will leave a trail which is described as a whole in the form of curves, if the price trend up or down, we can expect results higher than this indicator, this indicator is very easy to use to measure price trends, with the help of a MA1 line it can be concluded that: if the LR line through the price it will form a new trend, the nature of this indicator is lagging or late means: if This indicator is used alone, then we will not know when prices will stop rising or fall, should add oscillator indicators such as RSI or stochastic oscillator to anticipate this, the linear regression is a model of relationship between two variables with linear equations, for example: the weight equation weight and height of a man
Relative strength index (RSI)
Was first introduced by J Welles Wilder at 1978, on his new concepts in technical trading systems, the value of RSI in the scale vertical plots ranging from 0 to 100, RSI is a momentum indicator that compares the price, between the value at the moment of power drag losses that occurred
RSI can be used to determine the following things:
• Divergence of positive / negative
• The momentum of price movements
• Conditions Over Bought / sold over
But among the three uses above, the divergence of positive / negative, which is often used by traders, since the side of simplicity so that the interpretation of the RSI is not biased between one trader to another trader, how  identify
condition of OB / OS with RSI is simple, general rule that applies is the condition OB is obtained when the RSI crosses 70, and the OS when the RSI crosses 30, the book also recommends some 20-80 as limiting the OB and OS, it could be for a particular currency under certain conditions, restrictions OB / OS is at 40-60, so depends where appropriate, as well as the MACD can be used to measure the strength of the momentum of increase / decrease in price, the RSI can also be used for the same thing, except that if the MACD cross-over occurs at the zero line, then the RSI cross-over occurs in line 50, how to read the power of momentum a price the same as the MACD, which is when the RSI line through the center line (line 50) from below, the trend is going up, the magnitude of momentum is proportional to the magnitude of the value of RSI that occurs, as is also true vice versa
Spurious signals on the RSI
RSI moves with a very sensitive, a sensitive indicator which allows us to have many suggestions to make buy / sell according to the indicator is concerned, it is an advantage as well as a boomerang for us, because with the many suggestions that there are, the more chance of a misleading suggestion , which will cause large losses, by many chartist, RSI not used alone as the primary indicator because of the sensitive nature of it, RSI is more often used as reinforcing the suggestion by other indicators, ways to eliminate or  decrease spurious signals on the RSI is: find the best period in RSI which we will use, as we all know that the greater the period of an indicator, then the properties will be minor sensitivity, this also applies to the RSI, thus we can use the RSI with the period slightly larger than default  namely: 14 and may also be used over a period of 14, for example a period of 18

Saturday, September 17, 2011

TECHNICAL Analysis

The division of technical analysis
Technical analysis is divided into three, namely:
• Indicators
Indicator is a series of formulas that were created based on statistical science and used to predict the trend, the point of support, resistance, as well as overbought and oversold
Fibonacci retracement
• Fibonacci retracement is pattern recognition, calculated based on the Fibonacci sequence (chaos theory)
• Elliot wave trading
Elliot wave pattern is recognition, pattern analysis based on the existing form of graphs, there are 12 standard wave Elliott pattern and even then not include derivatives that are developed individually and trading research lab or a particular community
INDICATORS
There are over 50 types of indicators that can be used in technical analysis, but application
will only takes 2 and a maximum of 4 indicators, use of indicators lies in how you integrate the indicators with other indicators as well as time and the period you use, the indicator is very important in FOREX trading because it works for consideration in making decisions during trading, the indicators apply the principle of statistical science in its calculations, you do not need to do the calculations manually one by one in making the indicator, all the software providers FOREX charts usually provide an indicator in it and we can directly use it.
Some of the indicators that need to know is:
• moving average
• Moving average convergence divergence (MACD)
• Linear regression
• Relative strength index (RSI)
• Stochastic oscillator
• Commodity channel index
• Ichimoku cloud
Moving average (MA)
Indicator moving averages is the most standard and most often used when the currency price movements are not too volatile, which could identify the trends that occurred in the market, because the MA-type trend indicator so its use is widespread not only in the world of FOREX course, stock in trade is also using MA and technical analysis indicators, due to technical analysis are universal and can be used on all markets that use the collective data, moving average has three different variants, namely:
• simple moving average   (SMA)
• weighted moving average (WMA)
• Exponential moving average (XMA)
If you liked the game a more "secure" then the simple moving average indicators are more suitable than the other variants, and vice versa if you like games that are more at risk (the risk of profit as great as the risk of loss), the exponential moving average indicator is more suitable to be used, because more responsive and faster in delivering the signal, if you are a moderate use weighted moving average indicator.
Judging from signaling a bullish or bearish indeed exponential moving average indicator can provide an earlier signal than other indicators, the more sensitive an indicator it will be helpful to predict prices, but instead the more sensitive it will be more and more also means that false signals are generated, the signal given was wrong or did not last long, a clear indicator of just an instrument and that determines our decisions based on clues such instrument
Simple moving average (SMA)
Simple moving average is called a moving average or abbreviated as SMA, is the most simple moving averages and not weighted in the calculation using the closing price on the movement, although a simple high school quite effective in determining the trend is happening in the market, the general high school can be used for the following :
• identify trends that will occur
• determine the point of support and resistance
• align the other indicators that are too jagged
SMA application tables to predict the direction of the trend
• SMA  under a prices, bullish condition / trend up
• SMA is above the price, bearish condition / trend of declining
• SMA cut the price above, changes in the trend towards bullish
• SMA cut the price from below, changes in the trend towards bearish
• SMA  shorter period cut SMA longer period than under , change in the trend towards bullish
• SMA  shorter period cut SMA longer period than the above, change in the trend towards  bearish
• SMA with a longer period is above the SMA period is shorter, bearish condition / trend of declining
• SMA with a longer period under the SMA shorter period, bullish condition / trend of rising
Weighted moving average (WMA)
Weighting the value of the WMA will depend on the length of the period that we specify, the longer the period that we set, the greater the weighting given to the latest data, the overall regulations on WMA same as in high school, because it shall be the same way, just have a difference the weighting value only, in this case the selection of an appropriate period also affect the precision determination of the trend, weighted price on each of the different timescales, have different values
WMA application tables to predict the direction of the trend:
• WMA under prices, a bullish condition / trend of rising
• WMA is above price, bearish condition / trend of declining
• WMA cut the price above  , changes in the trend towards bullish
• WMA  cut the price from below, changes in the trend towards bearish
• WMA shorter period cut WMA longer period than under, change in the trend towards bullish

• WMA shorter period cut WMA longer period than the above  , change in the trend towards  bearish
• WMA with a longer period is above WMA shorter period, bearish condition / trend of declining
• WMA with a longer period under the WMA shorter period, a bullish condition / trend of rising
Exponential moving average (XMA)
XMA is a refinement of the method of high school, high school weighting is a cause which resulted in a delay of the signal change, assigning weights to XMA same as the WMA period involved, only the difference if the WMA, the longer the period that we use the greater weight of final value, XMA is the opposite happened: the longer the period that we use, the smaller the weighting that we use the last value
XMA application tables to predict the direction of the trend:
• XMA under prices, a bullish condition / trend of rising
• XMA are above the price, bearish condition / trend of declining
• XMA cut the price above  , changes in the trend towards bullish
• XMA cut the price from below, changes in the trend towards bearish

• XMA shorter period cut XMA longer period than under, change in the trend towards bullish
• XMA shorter period cut XMA longer period than the above, change in the trend towards  bearish
• XMA with a longer period is above XMA shorter period, bearish condition / trend of declining
• XMA with a longer period under XMA shorter period, a bullish condition / trend of rising