Technical analysis is an analysis technique known in the financial world , which is used to predict the trend of stock prices by studying past market data , primarily price and volume for the movement . Technical analysis can be used to predict stock prices , indexes , commodities , futures , options , rights , warrants and other instruments that are traded in the financial markets .
This indicator was introduced and developed by John Bollinger , this indicator shows the difference between the market participants voltatilitas the relative price is going in a certain period . At this indicator contains 3 pieces of line which shows an outline on pergerkkan price .
In the middle there is a line Simple Moving Average ( SMA )
Upper bands / borderline (high school + 2 standard deviations )
Lower bands / lines lower limit ( SMA – standard deviation )
Standard deviation is a statistical calculation that indicates the level of voltatilitas . By using the standard deviation , we make sure that the line up / down will react quickly to price movements and would indicate a period of time with high and low levels of voltatilitas . An increase or decrease in price will cause a sharp ” band ” wide . Prolonged sideways movement would be narrowing the “band ” . Bollinger bands are made to capture almost the entire price movement . Where if the price moves out of the upper and lower Bollinger bands , which indicates that there is already considered a high price ( overbought ) or had a low ( oversold ) .
Moving averages are one of the most popular indicators and easy to use for technical analysts . By using the average price of a price move , the moving average shows a series of data to identify trends and facilitate future price direction . This can be very helpful especially amid turbulent markets .
Moving average ( MA ) is An average value of the value of price movement for a certain period . The value of ” moving ” due to calculations , we use the data of the last of the respective period . Two types of moving average that is often used is simple and exponential .
* Simple Moving Average
Simple Moving Average ( SMA ) can calculate the average of the currency price movement for a period . Most often , the closing price is used to calculate the Simple moving average . For example : a movement for 5 days , moving averagenya will be calculated by adding up the price pentupan for 5 days and dividing by 5 .
10 +11 +12 +13 +14 = 60 , and then 60:5 = 12
Moving average will move because at the time the new entry price , the price of the old one will be removed , for example: If the closing price of the next one is 15 , the new price will be added and the oldest data will be released , which is 10 , then the moving average which will be calculated as follows :
11 +12 +13 +14 +15 = 65 , and then 65:5 = 13
Data last 2 , the moving average move of 12 or 13 . Due to the newly added data today , the old data is reduced and the moving average will continue into the next period .
A moving average is a lagging indicator that will always be behind the price . Dikarnakan moving averages are lagging indicators of the past , then this will be a very useful indicator to follow the trend . Where if the price is moving in a trend then this will be very useful indicator . However , if the price is not moving in the trend of this indicator can not be used .
* Exponential Moving Average
To reduce delays in the movement of the Simple Moving Average , analysts sometimes use exponential moving average , or more focused on moving average price diindicator exponent . Exponential moving average to reduce the delay by providing great value at a new price compared to the old price . This Penitikberatkan used at the new price depends on the length of the interval used . The shorter period is used , it is also focused on the existing price . For example : a 10 period moving average exponential weighing the most recent price moving 18:18 % and 20 period moving average and exponential weighing the most recent price 9:52 % . Method to calculate Exponential Moving Average is very complicated . But the most important thing to remember is that the Exponential Moving Average is more focused on the latest prices . He will react / change more rapidly with the recent price compared to the simple moving average .
For those who want to see an example formula for Exponential Moving Average , can be seen below . We suggest that this part is ignored and directly toward the second group should keperbandingan the moving average indicator .
Exponential Moving Average Calculations
Formula for an exponential moving average is :
X = ( K x ( C – P ) ) + P
X = EMA last
C = last price
* P = EMA previous period
K = Constant Value
( * SMA is calculated prior to the beginning of the period )
Constant values used in the relative prices to the previous exponential moving everage , formula for constant values are :
K = 2 ( 1 + N )
N = Number of periods for EMA
The workings of the formula EMA focused on the differences between the current price peride the last period and added to the period EMA ago . There are two possible outcomes : the price difference is positive or negative can .
Wider developed by Welles , creator of RSI and DMI , the Parabolic SAR sets the price movement stalled for a long position or a short position . Also known as stop-and – reversal indicator ( SAR represents ” stop and turn around ” ) , Parabolic SAR is more popular than the rest menentukkan to establish the direction or inclination . Wilder recommends that first, and then trading with Parabolic SAR direction and the direction of the price trend . If the trend is up , then take a buy position ( buy ) when the indicator is below price . If the trend is down , take a short position ( sell ) when the indicator is above price .
The formulation is quite complex and beyond the scope of this definition , but interpretation is relatively straightforward manner . The points which are below the existing price is tralling stop for a long position and if the dots are above the price then that is a trailing stop for a short position . In the early movement , the Parabolic SAR will provide a base price between the price and the trailing stop . As long as price moves , then the distance between the price and the indicator will be narrowed , it will be less likely to make loss so the price will move with the market price .
There are two variables: the step and the maximum step . Higher step in the set , the more sensitive indicator for price changes . If the step is set too high , the indicator will change often above and below , making it difficult to make decisions . The maximum step controls the adjustment of the SAR and price movement . The lower the maximum step is set , then the trailing stop will be farther away from the current price . Wilder recommends that this indicator is set at 0:02 and maximumnya set at 0.20.
Developed By Gerald Apple , Confergence Moving Average Divergence ( MACD ) indicator is one of the most precise and trustworthy simplest available . Moving Average Convergence Divergence ( MACD ) indicator is calculated by subtraction average12 – period exponential moving from the community or a specified currency of exponential – periodnya.9 muving average 26 – period exponential moving average of the MACD itself is usually applied as a function of the trigger or signal to take position . With the use of moving averages , MACD has a tendency to follow the characteristics . In addition , by plotting the difference of the moving average as a , MACD also has the characteristics of locomotion .
There are three techniques that are typically used to interpret the MACD :
Divergence : Where when MACD moves in the opposite direction to the price , then it will mendakan a change in price direction .
Centerline Crossover : Some analysts choose to buy or sell when the MACD goes above or below the zero line ( centerline ) .
Triggerline : When MACD cut up from the slow line , this indicates a bullish signal . And when the MACD cut down on the slow line , then this indicates a bearish signal .
Relative Strength Index
Relative Strength Index ( RSI ) is a momentum boundary graph that compares the magnitude of the increase in the value of the magnitude of a decline in value . RSI moves between 0 and 100 with 70 and 30 as the limit that the price is overbought or oversold . ‘s A single parameter , the time period used is calculated , 14 is usually used . RSI has been created by J. Welles Wilder .
The name of the RSI is actually very different and confusing compared with indicators such as the Relative Strength analysis of the graphic John Murphy’s ” Relative Strength ” and ranking IBD ” Relative Average” . Almost all kinds of ” Relative Strength is used to calculate not only one exchange alone . Like most true indicators , the RSI only used on a stock / stock . To avoid mistakes , then people do not mention in their entirety only RSI alone .
To simplify the calculation , the RSI on a few basic components between the increase in the average value , average value decline , the first hospital , and subsequent slow movement of RS . For the 14-period RSI , average rise is the increase in the total amount divided by 14 . Although there are only 5 profit ( loss ) , total it all 5 income ( loss ) divided by the total number of calculated the RSI period ( 14 in this case ) . Average loss / damage is calculated in a similar manner .
Note : to keep in mind that the average gain and average loss / damage is not true on average ! Instead of division by the number of acquisition ( failure / loss ) , period total profit ( loss ) is always divided by the period of time determined by the amount of – 14 in this case .
When the average gain is greater than the average loss , because RSI RSI rises will be greater than 1 . And vice versa when the average loss is greater than the average gain , the RSI declines because RS will be less than 1 . And the last of these calculations will ensure that the indicators ranging 0 and 100 . Note important : the data used to calculate the RSI , the more accurate the results