The rise and spread with the acceleration

In keeping with its name, the model «The rise and spread with acceleration» (BARR) is turning the model, which is formed after the excessive demand drops the price too far and too fast up. Designed by Thomas Balkovskim, the model was introduced in 1997. in the June issue of the magazine «The technical analysis of stock and commodity markets», and also included in his recently published book «Encyclopedia of graphical models».
The original model was called «The rise and accelerate the formation», or BARF. Balkovsky decided that «Wall Street» was not ready for such a term, and changed its name to «The rise and spread with acceleration». Balkovsky identified three main stages of the model: the introductory phase, burst and acceleration. Let's look at these stages and also look at the volume and reliability of the model.

1. Introductory phase: the first model is the introduction stage, which may last for 1 month or longer (for full-time schedule), and forms the base from which the trend line. During this stage, prices are rising in the usual manner, and there is no excessive acceleration. Trend line should be moderately steep. If it is too steep, then the next surge is unlikely to be quite substantial. If the trend line is not steep enough, the subsequent trend line break will occur too late. Balkovsky finds that the angle of 30-45 degrees is preferred. The value of the angle will depend on the scale (scale semi-log or arithmetic), and scale graphic. It may be easier to judge the reliability of trend lines, based on visual assessment.

2. Stage surge: a surge in acute increases, and prices are moving far away from the trend line of the opening stage. Ideally, the trend line of increasing the angle of the burst phase should be approximately 50% higher than the trend line of the opening angle of the stage. Roughly speaking, this requires an angle of 45 to 60 degrees. If it is not possible to measure the angles, the visual evaluation is quite satisfactory.

3. Reliability surge: It is important that the burst represents azhiotazhny speculative demand, which can not be supported for a long time. Balkovsky has developed what he called the «arbitrary» measurement technique to confirm the level of speculation during the burst. Distance from the highest peak stage of the burst before the opening stage of trend lines should be at least twice as much distance from the highest peak in the opening stages before its trend line. These distances can be measured by conducting a vertical line from the highest highs to the trend line of the opening stage. (See example below)

4. Turn surge: After azhiotazhny speculative demand decreases, prices are beginning to reach the peak, and a vertex. Sometimes there is a small double peak or a series of descending peaks. Prices begin to fall to the trend line of the opening stage, and a right-hand side of the burst.

5. Volume: In the market-based instruments increases during introductory phase, the volume is usually the middle and sometimes lower. When the speculative demand is beginning to shape the left side of the burst, the volume increases, because the increase is accelerating.

6. Stage acceleration: acceleration phase begins when the model overflows support trend line opening stage. Prices will fluctuate, or sometimes jump from the trend line before the break through it. Once breakthrough occurs, accelerating the phase comes to their rights and the reduction continues.

7. Supporting turns into resistance: After the trend line is broken, sometimes it is the restoration, which tests the level of resistance to chicken. The potential level of support, in turning resistance, may also be determined on the basis of corrective minima during the burst phase.
Model «The rise and spread with acceleration» can be applied to daily, weekly or monthly schedule. As stated above, the model is designed to identify speculative azhiotazhnoe increase, which is not viable over the long term. Since the price increase is very rapid in order to form the left side of the burst, the subsequent decline may be as rapid.

The graph «Level Three Communications» formed model «The rise and spread with acceleration» after prices rose in the speculative boom in early 2000. Prices have increased from 72 to 132 for 2 months, and this increase will eventually be viable.

• The opening stage of formation of 3-month period from the beginning of October, 99g. until early January 2000. Volume during this stage was relatively low and actually declined during the November-December improve.

• trend line rising from a minimum of an introductory stage, has formed an angle of 34 degrees. Visual assessment also shows that the trend line is neither too steep nor too flat.

• Stage surge began in early January, when the rise expedited with a large increase in volume. Conservative held trend line is formed the angle of 51 degrees, which was exactly 50% higher than the trend line of the opening angle of the stage.

• Distance from the highest peak before the opening stage of trend lines is equal to 13. Distance from the highest peak stage of the burst to trend line 38 is equal to the introductory stage. This is almost three times as much, and confirms the excessive speculative demand during the burst.

• After reaching a maximum of approximately 132, the prices dropped sharply and cannon from the trend line of the opening stage. The lower maximum was formed by about 115 (red arrow) and the trend line was soon broken.

• Reducing the trend continued after the break through and reached the 67 mark before the rally began remedial. Corrective rally lasted until about a horizontal line of support at around 95, before prices fall back to the new minimum.

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Flags and pennants

Flags and pennants are short-term continuation patterns that mark a small consolidation before the previous motion to continue. These models are usually preceded by a sharp increase or decrease in the high and mid-point of motion.

1. A sudden movement: to consider this model as a model to continue, should be a prior trend. Flags and pennants require a sharp increase or decrease at a high level. These movements usually occur at a high level and may contain GEPy. This movement is usually the first stage of a significant increase or decrease, and a flag or pennant is just a pause.

2. Flagpoles: flagpole - is the distance from the first support to overcome resistance or to the maximum or minimum of a flag or pennant. A sharp increase (or decrease), which forms the flagpole should overcome the trend line or resistance level or support. The line, built by this breakthrough to the maximum or minimum of a flag or pennant shapes flagpole.

3. Flag: model «flag» is a small rectangle that is tilted against the direction of the previous trend. If the previous movement was upward, then bent down to flag down. If the previous movement was down, the flag is bent down to up. Since the model «flag» is usually too short in duration, to have actual reactionary maxima and minima, the price should be active only occur within two parallel trend lines.

4. Streamer: model «pennon» is a small symmetrical triangle that begins with the widest part and converges, as a model (like the cone). The slope is usually neutral. Sometimes will not be certain reactionary maxima and minima, to conduct trend line and price activity should only occur within the converging trend lines.

5. Duration: flags and pennants are short-term models, which can last from 1 to 12 weeks (full time schedule). There is some controversy on the duration, and some analysts believe that 8 weeks is the limit for a reliable model. Ideally, when these patterns are formed in the period from 1 to 4 weeks. Once the flag has continued over 12 weeks, then this model is classified as a rectangle. Streamer more than 12 weeks will turn into a symmetrical triangle. The reliability of models, which continue from 8 to 12 weeks is highly debatable.

6. Breakthrough: for bovine flag or pennant break above resistance signals that the previous increase was resumed. For the Bear flag or pennant break below support signals that the previous decline has resumed.

7. Volume: The volume must be high during the increase or decrease, which forms the flagpole. The high volume provides legitimacy for the sudden and dramatic movement, which forms the flagpole. The increase in breaking the resistance (support) gives credibility of the reliability of the formation and continuation probabilities.

8. Objectives: The length of the flagpole can be used to break the resistance or support break flag or pennant, to assess the value of a subsequent increase or decrease.
Even though the flags and pennants are the usual models, the basic principles of their identification should not be ignored. It is important that the flags and pennants are preceded by a sharp increase or decrease. No sudden movements, the reliability of the model becomes highly questionable, and the sale of this model may carry additional risks. Look for confirmation of the amount in the initial move, consolidation and renewal of the movement to improve the reliability of the identification of these models.

Schedule «Hewlett-Packard» shows an example of a model «flag», which is formed after a sharp and sudden increase.

• A sudden movement: after the consolidation of three months, «Hewlett-Packard» broken resistance at the top 28 to begin a sharp increase. Trend line is built for maximum of 5 April and 16 February, has resisted, and her breakthrough came with the increase in volume. The price has increased from 28 to 38 in less than 4 weeks. (Note: is also possible that a small pennant was formed in early May with an impedance of approximately 31).

• flagpole: the distance from the break of resistance at 28 to a maximum of 38 formed a flag flagpole.

• Flag: pricing activity took place within two parallel trend lines that are bent down.

• Duration: a maximum of 38 to break at 36, a flag, a 23-day period.

• Breakthrough: the first break above the upper trend line of the flag took place on June 21 without an increase in volume. However, the price of GEO has made up a week later and a strong closing with a higher than average (red arrows).

• Volume: to confirm the model of the volume increase in the breakthrough to form a flagpole, was quite limited during the formation of the flag and increased immediately after a subsequent break of resistance flag.

• Objectives: The length of the flagpole is 20 points and was added to break the resistance at 36 for the design objectives in the region of 46.

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Price Channels Indicator

Introduction
Price channels like the band Bollindzhera form boundaries above and below the price bars and can be used as an indicator of variability. Price channels are formed by defining the set of periods, which will mark the graph up or at least n periods around the price bars. For example, a 20-day price channel will show the highest closing level for the past 20 days above the price line, and will observe the graph of the lowest closing level for the past 20 days below the price line. If the most recent price of a new maximum or minimum for n periods, then it will be on the schedule outside of the price channel. Price channels are different from ????? Bollindzhera that they use the minimum and maximum price values, instead of moving averages as a border.
Price channels can be applied to day, week, or monthly schedule and can shape the signals of buying and selling at the points breakthroughs. When the price breaks above or below, respectively, upper or lower the price channel, the new maximum or minimum, become active. When the price breaks above 20-day price channel, the price reached a 20-day maximum, and could potentially start the upward trend. In this situation, break the upper price channel may indicate a good time to buy a market instrument.

Sample

This schedule for the IBM breakthrough illustrates the lower channel (red arrow) followed by top-down trend. This new 20-day minimum is a signal to sell, and this signal was not deployed until the price had not crossed the June 9, the upper price channel.

The use of graphics programs



In most graphics programs, you can choose the length of time for pricing of channels. The more time taken, the more significant will be a breakthrough and a significant channel served signals.
The second option allows the user to move the price channel, left or right. For example, 10 for the second option price will move to the right channels for 10 years.

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Oscillator ROC

Introduction and calculation
Oscillator ROC (degree of change in percent) is very simple and yet effective dynamic oscillator, which measures the percentage change in price from one period to the next. When calculating the oscillator current price is compared to the price of a specified number of periods ago. For example, a 10-periodny ROC will be calculated as follows:

ROC = 100 * (today's closing price) / (closing price 10 periods ago)

The values of oscillator line shape, which fluctuates above and below the zero line, as the degree of change varies from positive to negative. Oscillator ROC can be used like any other dynamic oscillator, while the higher minimums, lower highs, positive and negative divergence, and crossing above and below zero for signals.

graph "Lucent" shows that a large negative divergence formed in December 1999. and oscillator ROC moved to negative territory just before the big decline in prices. Although this was an excellent signal to sell, oscillator can lead to rapid turn when it moves above and below zero. As with most technical indicators, ROC oscillator should be used in combination with other aspects of technical analysis, as well as with other indicators nedinamicheskimi.


The use of graphics programs

In most graphics programs, ROC oscillator can be built using a variety of periods, for example, 10 days or 30 days, by changing the values of the first option. The longer period of time used, the greater the fluctuation in the indicator (for both the value and duration). The second option allows the user to add a line to the ROC indicator moving average for more warning signals.

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Envelopes moving average

Introduction
Line simple moving average can be expanded by its environment parallel envelopes. These envelopes are rejected from the line of moving average for a certain percentage of the user to determine when prices deviated from the line of moving average for this percentage. For example, when building a 3% s envelope, we will have the upper parallel line, which is 3% above the moving average and the lower parallel line, which is 3% below the moving average.

Sample

Schedule "Cisco systems" demonstrates the 3%-s envelopes posted around the 20-day moving average price of market-based instruments. Please note, during the downward trend of the upper envelope has never been hurt, while the lower envelope has been hurt repeatedly. Movement outside the 3%-s' envelopes are essential for short-term traders who are more interested in smaller price fluctuations. Short-term analysis will consider the price outside the 3%-s' envelope as the pereprodannosti or perekuplennosti. On the other hand, when analyzing the long-term range, you can focus on prices outside the 5% or 10% s-s-envelope that surrounds the 10-week or 40-week moving average cost.

The use of graphics programs

In most graphics software, moving average envelopes can be built on the simple imposition of a price schedule. To do this, usually the first option in the parameters of the tool determines the number of periods for the moving average (the default is usually 20), while the second option sets the percentage difference between the envelope and moving average line (the default is usually 3).

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Indicator Arun

Introduction

Designed Tyusha Cheyndom in 1995, Arun indicator is an indicator that can be used to determine, whether the market trend is a tool or not and how strong the trend. "Arun" in Sanskrit means "Early Light of Dawn" and Cheynd chose this name for this indicator, since it is intended to show the beginning of a new trend.

Arun indicator consists of two lines, Arun (top) and Arun (down). To calculate the indicator Arun only required parameter, which is the number of time periods. Arun (top) displays the amount of time (based on per cent), which took place between the beginning of the interim period and a point which was the highest price during this period of time. If market-based instruments set a new minimum for the given time period, the value of Arun (up) will be equal to zero. On the other hand, if the market instruments rose higher than it was during the time period, the value of the indicator will be equal to 100. For each subsequent period that passes without another new high, Arun (up) moves down on the amount equal to (1 / number of periods) x 100.

Technically, the formula for Arun (up) will be as follows:

[[(number of periods) - (number of periods since the highest peak during this time)] / (number of periods)] x 100

For example, consider the construction of the line 10-periodnogo Arun (up) in the afternoon schedule. If the maximum price during the past ten days has been shown 6 days ago (4 days, starting with the period of time), the value of Arun (up) for today will be equal to ((10-6) / 10) x 100 = 40. If the minimum price for the same period was marked yesterday (ie on 9 th day), the value of Arun (down) for today, will be equal to 90.

Arun (down) is calculated in the same way in the opposite direction, by finding new minima, instead of new highs. When the new minimum is set, Arun (downstream) will be equal to 100. If the market sets a new best tool for this time period, the value of Arun (downstream) will be equal to zero. And so on ...

Formula for Arun (down):

[[(number of periods) - (number of periods with a minimum wage during this time)] / (number of periods)] x 100

Oscillator Arun

A separate indicator called Arun Oscillator can be constructed by subtracting the value of Arun (down) from the value of Arun (top). As Arun (top) and Arun (down) varies between 0 and 100, the Arun Oscillator oscillates between -100 and +100 with zero as the center line.

Basic principles of interpretation

Cheynd states that when Arun (top) and Arun (down) to move down close enough to each other, it signals that the full swing phase of consolidation, and no clear trend is not strong. When Arun (top) falls below 50, this indicates that the current trend has lost its upward momentum. Similarly, when Arun (below) falls below 50, down trend has lost its momentum. Values above 70 indicate a strong trend in the same direction, since the meaning of Arun (up or down) is high enough.

Arun Oscillator signals an upward trend when it is above zero, and the descending trend when it falls below zero. The farther from the oscillator is the zero line, the stronger the trend is developing market-based instruments.

Indicator Arun somewhat resembles indicator DMI Vayldera (and Oscillator Arun similar lines ADX Vayldera), however, the indicator Arun built in a totally different way. Differences between these two indicators can be very instructive.

The use of graphics programs

Many software packages allow users to build Oscillator indicator Arun and Arun, using a selected number of periods. Typically, the default value is 25, but it can be changed through appropriate option. The increase in the number of periods ago received signals a significant, but this may lead to delay.

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TRIX Indicator

Description
Indicator TRIX - is a dynamic indicator that shows the degree of change in the percentage of triple exponentially smoothed moving average of the closing market price of the instrument. Fluctuating around the zero line, the indicator TRIX is designed to filter out traffic market instruments, which are small in relation to the larger trend of market-based instruments. The user specifies the period (eg 15) to form a rolling average, and those cycles that are shorter than this period are filtered.

Indicator TRIX is a leading indicator and can be used to predict turning points in the trend through its divergence with the price of market-based instruments. Moreover, you can create a sliding average with a smaller period (eg, 9) and use it as an impulse line to see where the indicator is ahead of her. Intersection of line indicator with its pulse line can also be used to buy or sell signals.

Calculation
To calculate the indicator TRIX, you must first select the period for the formation of an exponential moving average of closing prices. For the 15-day period, the calculation would be as follows:

1. Computes the 15-day exponential sliding average closing price;

2. Computes the 15-day rolling average of the exponential moving average, calculated in item 1;

3. Computes the 15-day rolling average of the exponential moving average, calculated in Clause 2 Now we have a triple exponentially smoothed sliding average closing prices, which considerably reduces the variability.

4. Finally, the calculated 1-day moving average percentage change, calculated in paragraph 3

Application
As the TRIX indicator measures the degree of changes in closing prices, the positive value of the indicator is interpreted as a sustained improvement in the closing market price of the instrument. The positive value of TRIX, in a manner similar to the positive development of the price, which allows the indicator to act as a buying signal whenever it crosses the zero line upwards. Similarly, crossing the zero line down implies that the price has closed below the trend at the end of each period, which may be a signal of sale.

Impulse line, as mentioned earlier, is also a useful indicator for the purchase or sale. As the pulse period is shorter than the line, the intersection of the above it suggests that the recent closing price is much higher. Buy signal occurs when the indicator TRIX crosses its line-up pulse and the signal-sale, respectively, the condition occurs when the indicator crossed his pulse down the line. During lateral movements of the market may be false signals, so the best indicator TRIX works when the price trend is developing. Like any other indicator, TRIX is desirable to use in conjunction with other indicators and aspects of technical analysis to improve the reliability obtained from the signals.

Sample

In the example with "Microsoft", all three bull crossing between indicator TRIX and his pulse was accompanied by a line dating back trends. These intersection points represent the ideal for shopping, because they were accompanied by a rapid development trend movement.

The use of graphics programs



TRIX indicator is present in most software products. The number of periods, typically defined by the first option, a pulse line may be specified in the sub window. Default settings are 15-day moving average with a 9-day pulse line. 30-day period may be used for a more conservative trend of the evidence, although 15 days would be quicker to respond to the potential formation of the trend.

Nicholas Fisher
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The weighted volume

Introduction
Joe Grenvil introduced weighted volume (OBV), in his book "The New Key to Granville profit on the stock exchange in 1963. This was one of the first and most popular indicators, which measures the positive and negative volume. The concept behind the indicator as follows: volume precedes price. Weighted volume is a simple indicator that adds the amount of the period, when the closing occurs with the increase and deducts the amount of this period, when the closing occurs with decreasing. Overall total value derived from the additions and subtractions is the amount, form a balanced line level. This line then may be compared to the price schedule of the main tool for finding a market divergence or confirmation.

Calculation
As stated above, the weighted volume is calculated by adding the amount for a certain period to the current overall value, when the price of market-based instruments rose with increasing volume and subtraction, when the price closes down.

For example, if the closing price today than yesterday's closing price, the new weighting will be equal to the amount of:

OBV = Yesterday's OBV + today's value of volume

If today's closing price is less than yesterday's closing price, the new value will OBV:

OBV = Yesterday's OBV - Today's Volume

If today's closing price is equal to yesterday's closing price, the new weighted volume is:

OBV = Yesterday's OBV

Application
The idea behind the OBV indicator is that changes in the weighted volume will be preceded by changes in prices. Rising volume may indicate the presence of the influx of money into the market-based instruments. Then, as the audience should be the example, the price of market-based instruments also will increase.

Like other indicators, the indicator OBV will take a certain direction. Rising (Bull) line is the weighted volume shows that the higher in the days of growth. If the price of similar increases, the OBV indicator may serve as confirmation of the price trend is upwards. In this case, the rising price is a result of increased demand for market-based instruments, which is a prerequisite for strong ascending trend.

However, if prices move higher, while the line volume is reduced, the presence of a negative divergence. This divergence suggests that the upward trend in demand is not supported properly, and should be seen as a warning sign that this trend will not continue long.

Numeric value-weighted volume is not so important, but rather serves to guide the line. Trader should focus on the direction of OBV and its relationship to the price of market-based instruments.

The above graph shows how the line is a weighted amount can be used as a confirmation of the price trend. The peak in September was accompanied by a subsequent reduction of price to match shipam volume, thus implying that the descending trend should continue.




The use of graphics programs

In most graphic programs Weighted volume can be constructed as an indicator. Typically, the window parameters of the first option specifies the number of periods for the formation of the rolling average, while the other options do not relate to the schedule.

Nicholas Fisher
stockcharts.com

The percentage volume oscillator (PVO)

The percentage volume oscillator (PVO) is the percentage difference between the two sliding average volume. The indicator is calculated using the following formula:

Oscillator volume (%) or PVO = ((12-day EMA level of - 26-day EMA of volume) / 12-day EMA volume) x 100

12-day Exponential Moving Average (EMA) and 26-day Exponential Moving Average has been used as an example. Usually, they can be modified to better meet the longer or shorter periods of time. On the basis of its formula, the indicator PVO is the maximum value of 100, but has no minimum value. For example: if a 12-day EMA is 2000, a 26-day EMA is 8000, the value of the indicator is equal to PVO -300: ((2000 - 8000) / 2000) x 100 = -300. The absolute value is not as important as the direction or crossing above and below the zero line.

Application
The percentage volume oscillator can be used to determine the periods of expansion or reduction in three different ways:

1. The intersection of the median line
Like the price oscillator Interest oscillator volume fluctuates above and below the zero line. When PVO is positive, the short EMA amount greater than the longest amount of EMA. When PVO is negative, short EMA amount less than the long EMA of volume. PVO Values above zero indicate that the volume levels are generally higher than the average value and volume of relatively strong. When PVO is below zero, the volume levels are generally lower than the mean value and the volume relatively low.

2. Directional Movement
The general direction of movement of Interest oscillator volume may offer a quick visual assessment of the volume. Improving the PVO indicator signals that the level of increase, a fall of PVO indicator signals that the volume levels are reduced.

3. The intersection of moving averages
The last variable in the parameters of the indicator is used for forming the signal line. For example: PVO (12,26,9) would include a 9-day EMA indicator of PVO, as well as the histogram represents the difference between the oscillator and its 9-day EMA. When the percentage volume oscillator moves above its signal line, volume levels, in general, are increasing. When the percentage volume oscillator moves below its signal line, volume levels, in general, reduced.

Movement in the percentage volume oscillator is completely separate from the price movements of the market instrument. Also, movements in the PVO indicator may be associated with price movements that provides a measure of the degree of pressure the buyers or sellers. Increased prices, combined with strong performance indicator PVO will be seen as a sign of strong pressure customers. When PVO is reduced, while the price of market-based instruments has fallen, it points to the falling volume at lower and at a very high pressure salespeople. In the example presented above, the pricing schedule "FILE" is shown along with two oscillators percentage of volume, with the following parameters: indication PVO (12,26,9) at the top of the graphics and LED PVO (5,60,1) in the lower part. When the latter variable is set to 1, as is the case with the indicator of PVO (5,60,1), it will not form any signal lines or histograms. During August and September, the share traded in a range between 15 and 21, and indicator PVO remained mostly below zero. There was a small rise above zero, together with shares rising in late August, but the action remained limited to its trading range. When action is beginning to rise from its October level, the indicator PVO moved to positive territory with sharp increases (green line). Increase was confirmed by increasing volume, and the action of the resistance broken. Breakthrough resistance with increasing amount of signal is very strong pressure on buyers.

The use of an oscillator in graphic programs

Typically, graphics programs, the percentage volume oscillator has the option to establish the parameters of the three variables and is presented in the same format as the price oscillator (PPO). Default settings are usually - (12,26,9): The first variable is intended for the short exponential moving average (EMA) of volume, the second - for a long exponential moving average volume, and the third - for the signal line. Signal line is the exponential Moving Average of a direct indicator of the PVO, and can also be made longer or shorter. Histogram (solid area above and below zero) represents the difference between the indicator of PVO and its signal line. For those who do not want to use a signal line or a histogram, a third variable can be set equal to 1.

In the example above, the indicator PVO is located at the top of the graphics settings, the default - (12,26,9) and at the bottom of the parameters (5,60,1). Although the form of lines for both PVO indicator plants are almost identical, right scale reflect the different ranges, and the point of intersection.

• The PVO (12,26,9) exceeded 20 in late October, while the indicator of PVO (5,60,1) exceeded 50.

• In early October (the red line number 1), an indicator PVO 5,60,1) crossed below zero line, while the indicator PVO 12,26,9) stayed above it.

• In early December (the red line number 2), an indicator PVO 5,60,1) moved above zero before this indicator made PVO (12,26,9).

Most of these differences can be attributed to the fourth level of the short EMA in both plants indicator PVO. 5-day EMA volume is much more sensitive than the 12-day EMA of volume. Shorter Moving averages are more volatile and more often will be crossing the median line. Periods of above-average volume may also be confirmed by looking for the volume bars that exceed the 60-day EMA (green oval in October). Please note that both PVO indicator went up sharply in the second half of October, during how long did the volume spike above 60m shares.

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Within-day fluctuations

Within days of the market to swing back and forth like a drunken man. This fluctuation most frustrating traders, forcing them to take a position on the less advantageous prices. But this intra-day fluctuation shows the basic procedure, which you can use to buy or sell at reducing to the maximum of the day.
The timing - it all when it comes to markets. Etoosobenno true with respect to intra-day price movement. Many traders ignore this fact and try to use the market as they wish. This approach provokes them to ignore the fluctuations and focus on the signals directly to individual price charts. This is a critical mistake, because everything is interconnected together in a common large-scale picture.
The vast majority of market-based instruments should be the direction of intra-day fluctuations. Of course, each market-based instruments will be relatively stronger or weaker than the overall market. This discrepancy creates a mechanism that allows us to buy or sell at market turns. For example, strong stocks tend to recoil to its minimum as well as intra-day fluctuation reaches its low point. Then, both up above, as buyers returned to the pressure on the market.

Futures on the index indicate intra-day fluctuation with high accuracy. But the interpretation of fluctuations is more complex than simply search for the ascending or descending trend. Futures Markets react to various forces, but few of them are stronger than the principle of price discovery and the range of the first hour.
The three levels identified by these values define test scenarios for the day trendline. In good days, using index futures breakthroughs first hour, and roll back to price discovery as a springboard for significant rally. But the interaction between price action and the three reference points can sometimes be complex and difficult to interpret.
One of the most common turn begins when the range of market-based instruments in breach of the first hour, varies within a few minutes and then falls back into its borders. This failure of the implementation of the model pushes traders to close positions and change direction. Originates a new intra-day fluctuation.

Good mood Stochastic indicator will allow traders to more easily visualize the intra-day fluctuations. But the interpretation is the main feature with this classic instrument. Do not assume that the spread is close only because the value of the indicator reached perekuplennosti or pereprodannosti. Finds support in the pricing model or wait for the indicator was accelerated in the opposite direction.
Most charts in different time formats, may reflect the conflicting information about the vibrations. Literate traders use these differences to their advantage, rather than remain in doubt. They wait for Stochastics to a larger and a smaller scale will be synchronously specify the maximum or minimum values and then move in the opposite direction. This is a strong signal that the market is going to fluctuations in the opposite direction.

Another way to manage the contradictory signals over possible long-term moving average cost. We recommend that you install Exponential Moving averages with a period of 200 bars and 50 bars in all the intra-day charts. These averages reflect the trend of development of new variations, when market-based instruments back to the very low levels.
Usually, the price bars on the same session will be to retreat back to the exponential moving average with a period of 50 bars, at the same time at another session reached its exponential moving average with a period of 200 bars. This convergence predicts strong turnaround, especially when combined with the convergence Stochastics. Add to this the successful testing of the opening price or the range of the first hour, and you get a very good opportunity for trade. These signals can be coordinated very effectively used to buy or sell at the best prices of the day.

Here is an example of how this can work. Purchase of shares "Talk America" can be implemented 12.09.03 within 7 cents from the day a minimum. After a sharp downward movement of the early morning has spread because market volatility has committed so-called "trip inside." Turn on V-shaped bases occurred just inside the main level and short-term recovery Fibonacci moving average.
Tilt the market at certain times during the day adds a final dimension to the intra-day fluctuations in mechanics. In most sessions, the market has developed from the opening kick in the first half hour of trade. The main strength or weakness of the movement, which is often followed by, dictate the nature and magnitude of price fluctuations throughout the day.
The market often shows a different turn in about 90 minutes until tender. This fluctuation can be quickly dissipated, or cause a stampede last hour in one direction or another.

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Price Oscillator

Price Oscillator - This indicator is based on the difference between two Moving averages, and expressed as a percentage or in absolute values. Price oscillator, expressed in percentages, respectively, called the percentage price oscillator (PPO - Percentage Price Oscillator), a price oscillator, expressed in absolute values, is called the Absolute Price Oscillator (ACO - Absolute Price Oscillator). The number of time periods may vary depending on the preferences of the user. For daytime schedules may be preferred over long sliding average to filter out of the "market noise" associated with daily price movements. For weekly charts, which are already filtered, part of the "market noise", can be considered more appropriate for shorter Moving averages. It may also be imposed subsequent rolling average for use as a pulse line, just as in indicator MACD.

Absolute Price Oscillator (APO)
Absolute Price Oscillator (APO) is calculated by subtracting the longer moving average from the shorter moving average. See picture number 1


10 - periodnaya Exponential Moving Average (EMA) minus 30 - periodnaya Exponential Moving Average (EMA)

The values and form a line of an oscillator that fluctuates above and below zero, according to the difference in moving averages. If a short Moving Average is above a long moving average, the indicator will be positive. If a shorter rolling average is below the longer moving average, the indicator will be negative.

Indicator MACD, which is calculated as the difference between two exponential sliding average, is essentially the equivalent of APO. And if the software used for graphic display of price data, there is no indicator of APO, then you could easily be used an indicator MACD.

Percentage Price Oscillator (PPO)
Percentage Price Oscillator is calculated by subtracting the longer moving average from the shorter moving average and then the result is divided by the value of a long moving average. See picture number 2


(10 - periodnaya EMA minus 30 - periodnaya EMA) divided by 30 - periodnuyu EMA

This formula shows the difference between the two sliding average as a percentage of the longer moving average.

Absolute or percentage
Percentage Price Oscillator (PPO) and the Absolute Price Oscillator (APO) is served almost the same signals and are essentially the same form. All crossing the median line, as well as the crossing, which occurs when a short Moving Average crosses above or below the longer Moving averages come in one at the same time. However, because the PPO is calculated on the basis of per cent, the form of his lines may differ little, but important nuances of the form of lines of APO. Below is a schedule of the index "Nasdaq Composite", which illustrates some of the differences that may arise unexpectedly.
1. The green circle indicates that the PPO has formed boleenizky a maximum in December, while the APO has formed a higher maximum.
2. Later in December, APO continue higher, and PPO started smoothed. (red arrows) 3. In early January, PPO showed a lower minimum, which was one day earlier than the APO.


There are two main reasons to use the Price Oscillator Percentage rather than absolute price oscillator.

1. In the case with the percentage price oscillator, it is possible to compare the price levels of the oscillator between the two market-based instruments. Value PPO +5% means that over a short Moving Average of 5% higher than the longer moving average cost. The value per cent is comparable with other market-based instruments, regardless of the price of the instrument. Percentage Price Oscillator (PPO) for the SLB has reached only 3% of their peaks, while the index "Nasdaq Composite" rose above 7%.
2. Percentage Price Oscillator provides a better balance between the two moving average cost. The difference between two Moving averages shown on the shorter moving average. This allows you to compare values between the periods of time, regardless of the price of market-based instruments. In the case of the absolute price oscillators, the higher the price of market-based instruments, the greater the extremes oscillator. With the percentage price oscillator compare shares "Amazon" after a certain time, perhaps regardless of where the stock price in the region of 10 or 100.


PPO - histogram
As the Price Oscillator and MACD are so similar, the concept of MACD-Histogram was applied to the PPO. PPO-Histogram shows the difference between the PPO and the 9-day exponential moving average (EMA) from the PPO. The schedule is presented as a histogram, so that crossing the median line and the divergence were easily identifiable. The same principles that apply to the MACD-histogram is also applicable to PPOgistogramme.

The intersection of the median line for the PPO-Histogram is the same as the intersection of the moving averages for the PPO. If the PPO is more than the value of its 9-day EMA, then the value for the PPO-histogram will be positive. On the contrary, if the PPO is less than the value of its 9-day EMA, the importance PPO-Histogram will be negative.
Further increase or decrease promezhutkamezhdu PPO and its 9-day EMA would be reflected in the PPO-histogram. The sharp increase in the PPO-histogram indicates that the PPO increases faster than its 9-day EMA, and means that the bullish momentum has increased. The sharp decline in PPOgistogramme indicate that PPO is falling faster than the Moving Average and mean that the bearish momentum is increasing.


For more information on the interpretation of this indicator and its signals, see our article on the oscillators and MACD in past issues of the journal.

Forex Magazine
based on stockcharts.com

Moving Averages

Moving averages are one of the most popular and useful tools available to technical analysts. It smooths some of the price and facilitate the identification of the trend, which is especially useful for mobile markets. It also underpins many other technical indicators.

The two most popular types of moving averages - this is a simple Moving Average (SMA) and Exponential Moving Average (EMA).

Simple Moving Average (SMA)
Simple Moving Average is formed by calculating the average price of market-based instruments for the specified number of periods. Although it is possible to form a sliding average on the basis of price discovery, the maximum and minimum, most moving averages use the closing price. For example: the importance of 5-day simple moving average is calculated by summing the closing prices over the past 5 days and dividing the total by 5.



Calculation is repeated for each price bar on the graph. Then, average values are connected and form a smooth curve line - moving average line. We continue our example: if the next closing price equal to 15, then this new period will be added, and the first day for which the value is 10, will be deleted. The new value of 5-day simple moving average would be calculated as follows:

Over the past 2 days, SMA moved from 12 to 13. As new days are added, the past few days will retire, and Moving Average will continue to move forward. In the example above, using closing prices for Eastman Kodak (EK), the tenth day is the first day, when possible to calculate the value of 10-day simple moving average. Since the computation continues, a new day is added, and the earliest date retracted. Significance of 10-day SMA for the eleventh day is calculated by summing the price from 2 to the 11th day and dividing the sum by 10. Then the process of calculating the moving average for the next day, where the 10-day SMA for the 12-day price is calculated by summing the 3 rd to 12 th day and dividing the sum by 10.


The schedule above is a piece that reflects the consistent data from a table. Simple Moving Average starting with the 10 th day and continues on.

This simple example reflects the fact that all moving averages are indicators of delay and will always be "lag" on prices. EK price went down, but the simple Moving Average, which is based on data from the previous 10 days remained higher prices. If the price increased, SMA probably would have been lower. Since Moving averages are indicators of delay, they belong to the category of indicators following the trend. When prices are in trend, Moving averages work well. However, when prices are not in trend, Moving averages can file false alarms.

Exponential Moving Average (EMA)
To reduce the lag in simple moving averages, traders often use the Exponential Moving averages (also called "Moving averages weighted by the exponent). EMA reduces lag, giving more weight to recent prices on the earlier price. Given more weight to recent price depends on the period moving average. The shorter the period EMA, the more weight will be given to the most recent price. For example: 10-periodnaya Exponential Moving Average gives the most recent price of 18.18 weight%, while the 20-EMA periodnaya only 9.52%. As we shall see, EMA calculation more difficult than the calculation of SMA. It is important to remember that the Exponential Moving averages give greater weight to recent prices. Also, they will respond quickly to recent price changes than the simple moving average cost. Below is the formula for computing.

Computation of the exponential moving average
Exponential Moving averages can be defined in two ways - as an EMA-based EMA or as a percent based on the period. EMA is based on per cent per cent as its sole option, while the EMA is based on the period parameter, which represents the duration of EMA.

A formula for the exponential moving average:
EMA (current) = ((Price (current) - EMA (prev)) x multiplier) + EMA (prev)

For EMA, on the basis of per cent, "multiplier" is equal to the specified percentage of EMA.

For EMA, based on the period, "multiplier" is equal to 2 / (1 + N), where N - the specified number of periods.

For example, the multiplier from 10 EMA periods is calculated as follows:

This means that the EMA with 10 periods is equivalent to 18.18% EMA.

* Note: Some graphics programs support only on the basis of EMA period.

Below is a table with the results of calculating the exponential moving average for Eastman Kodak. For odnoperiodnoy exponential moving average was used Simple Moving Average as an exponential average the previous period (yellow allocated value for the 10th period). Since the 11 th period EMA using the previous period. Below is a calculation for the 11-second period:

1. (C - P) = (61.33 - 63.682) =- 2.352
2. (C - P) x K =- 2.352 x .181818 =- 0.4276
3. ((C - P) x K) + P =- 0.4276 + 63.682 = 63.254

* 10-periodnaya Simple Moving Average is used only for the first calculation. Then using the previous period EMA.

Please note that each previous closing price in a series of data used to calculate each value of EMA, which form the EMA line. While the impact of earlier data decreases over time, it never disappears entirely, regardless of the specified period EMA. The impact of earlier data is reduced for short EMA faster than that for long, but again, it never disappears completely.

Simple or Exponential
At first glance it seems that the difference between the exponential moving average and the simple moving average is minimal. For this example, which uses only 20 trading days, the differences are minimal, but nevertheless, it is. Exponential Moving Average steadily closer to the actual price. On average, EMA to 3 / 8 point closer to the actual cost than the SMA.

On the 10 th day 20 th day, EMA was closer to the price than the SMA in 9 of 10 times. Once SMA was closer to 18-second period (highlighted in yellow) and it is not long lasting. The average absolute difference between the exponential moving average and the current price of 1, a simple Moving Average had an average absolute difference - 1.33. This means that, on average, Exponential Moving Average was at 1 point above or below the current price, but just rolling average was 1.33 points higher or lower than current prices.

When EK stopped falling and began to haggle in the commercial field, SMA continued to decline. During this period SMA was closer to the actual price than EMA. EMA start to deviate from the actual price, and was farther from it. This occurred because the actual cost began to change direction. Due to its delay SMA continued to decline, and December 13, even addressed the actual price.

Comparison of 50-day EMA and 50-day SMA for Compaq also shows that the EMA follows the trend quicker than the SMA. The blue arrows mark the point when the action started a strong trend. Attaches more weight to recent prices, EMA reacted quicker than the SMA and remained closer to the actual price. The gray circle shows when the trend began to slow down and trade has moved into range. When there is a shift from the trend to trade in a range, SMA was closer to the price. As the band continued to trade in the second half of 1999., Moving averages, both agreed. At the end of 1999. Compaq began to build upward trend and the EMA to respond quickly to recent price changes, and remained close to the price.

Which is better?
Which Moving Average to use depends on your trading style and your preferences. Simple Moving Average is obviously lagging behind, but the Exponential Moving Average can be prone to more rapid breakthroughs. Some traders prefer to use Exponential Moving averages for shorter periods of time to display a more rapid change. Some investors prefer for long periods of Simple Moving averages to determine the long-term changes in trends. In addition, much will depend on the particular market instrument. 50-day SMA is better able to work in determining the levels of support for the Nasdaq, but the 100-day EMA may be better for the Dow Transports. Type of moving average and the time period will greatly depend on the particular market instrument and how it reacted in the past.

Some may seem that the higher sensitivity and earlier alerts have to be more profitable. This is not always accurate and has a big dilemma for the technical analyst: the choice between the sensitivity and reliability. The more susceptible indicator, the more signals it will bring. These signals may prove timely, but with increased sensitivity increases the number of false alarms. Less sensitive indicator gives smaller signals. However, less sensitivity leads to fewer but more reliable signals. Sometimes these signals can be delayed.

For moving averages, this raises the same dilemma. Shorter Moving averages are more sensitive and to cast more signals. EMA, which is generally more sensitive than the SMA, probably also will bring more signals. However, also will increase the number of false signals and rapid turn. Longer Moving averages will move slower and to cast fewer signals. These signals are likely to be more reliable, but they may also be delayed. Every investor or trader should experiment with different types and periods moving averages to determine the relationship between sensitivity and reliability of the signal.

The indicator follows the trend
Moving averages smooth consistency of price data and facilitate the definition of trend. As for the formation of moving averages of past price data are used, they believe, or delay for the trend following indicators. Moving averages will not prevent a change of trend, but rather to follow the current trend. Therefore, they are best suited to determine the trend and the goals associated with the current trend rather than to predict.

When to use
Since Moving averages are for the trend, they work best when the tool is in the market trend and are ineffective when the market moves in a shopping tool range. With this in mind, investors and traders should first identify the market-based instruments, which show signs of the trend, and then try to analyze them with the use of moving averages. This process should not be a scientific examination. Usually, a simple visual assessment of the price schedule will help determine whether market-based instruments has shown signs of the trend.

In its most simple form, the price of market-based instruments can only do one of three things: develop a trend upward, downward trend to develop and haggle in the price range. Ascending trend of development, when market-based instruments creates a series of higher highs and higher minima. Top-down trend is developing where the market-based instruments creates a series of lower minimums and lower highs. Trade in the price range may occur if market-based instruments can not ascending or descending trend. If market-based instruments traded in the price range, rising trend begins when breached the upper limit of the range, and top-down trend started when the broken lower limit.

In the case of Ford, it is clear that action can be found in the trend, and in the commercial range. The red circles indicate the stage of trade in a range that cyclical trend. Sometimes difficult to determine when the trend ends and begins trading in the range, or when trading in the range of stops and starts the development trend. Basic rules for the trend and trade in the ranges set forth above may be applied to Ford. Pay attention to the times of trading bands, breakthroughs (such as up and down) and periods of trends. Moving Average worked well in the trend, but it does not matter when trading in the range. Also note, as the Moving Average is late for the trend: it is always a price at the time of a rising trend and higher prices in the downstream. For this example use 50-day Simple Moving Average. However, the number of periods is optional and will depend on the characteristics of market-based instruments, as well as on individual preferences trader.

If the price movement of fluid and a hectic period of time, the Moving Average probably not the best choice for the analysis. MMM graph shows the share, which in late April, moved from 70 to 90 a few weeks. Prior to that, increasing the price gyrate above and below its moving average. After increasing the share continued its erratic behavior, not developing trend. Attempting to analyze this event, based on the moving average is likely to be futile.

A cursory glance at the schedule for AOL shows a picture different from MMM. During the same period of time, AOL has shown the ability to develop trend. There are 3 good trend that continued for several months. Once the action moves above or below the 70-day SMA, it usually continues to move in the same direction a certain amount of time. On the other hand MMM breaks above and below its 70-day SMA on many occasions and was prone to frequent quick turn. Longer Moving Average, probably would work better for the MMM, but it is clear that it has fewer features than the trend from AOL.

Installations for the moving average
As soon as the market-based instruments has shown enough evidence to identify a trend, the next task is to select the type and number of periods moving average. The number of periods used in the moving average will vary depending on the mobility market instrument, its propensity to trends and personal preferences. What mobile market instrument, it requires more smoothing, and hence longer Moving Average. Actions that do not show a strong tendency to trend, may also require longer moving averages. Checks and error - usually the best means to find a suitable length. Make a Moving Average is consistent with price data. If too many breakthroughs, the Moving Average extend to reduce its sensitivity. If Moving Average reacts slowly, the Moving Average shortens to increase its sensitivity. In addition, you can try to use Simple and Exponential Moving averages. Exponential Moving averages are usually best suited for short-term situations that require a more sensitive Moving Average. Simple Moving averages work well in the long-term situations that do not require great sensitivity.

Applications moving averages
There are many opportunities for the application of moving averages, but the three main:
"Identification / confirmation of the trend
"Identification / confirmation of support and resistance levels
"Trading systems

Identification / Confirmation of the trend
There are three ways to determine the direction of the trend using moving averages: direction, location, and crossing.
The first method used for determining the trend line moving average to determine the trend. If the Moving Average is directed upwards, the trend is considered to be ascending. If the Moving Average is directed downward, the trend of top-down view. The direction of the rolling average can be determined by simply looking at a plot of moving average, or applying to the moving average indicator. In any case, we would not want to react to every little change, but to see the general direction of motion and significant changes.

In the case of Disney, the trend was used to determine the 100-day Exponential Moving Average (EMA). We do not want to act on the basis of small changes in the moving average, but prefer to work on significant ups and downs. This is not a scientific study, but many significant turning points can be determined through visual observation (red circles). There were some good signals, but also quick-turn and late signals. In general, the results would depend on the points of entry and exit. Length of moving average influences the number of signals and their timeliness. Moving averages are indicators of delay. Therefore, the longer the rolling average, the more it will lag behind the price movement. For faster signals may use 50-day EMA.

The second way to determine a trend of prices. The situation regarding the price moving average could be used to determine the main trend. If the price is higher than the rolling average, the trend is considered to be ascending. If the price is below the moving average, considered top-down trend.

This example is fairly straightforward. Long-term trend for the Enron (ENE) is defined by the position of its shares on the 100-day SMA. When ENE was above its 100-day SMA, the trend was considered to be bovine. When the share is below the 100-day SMA, the trend was seen as bearish. Buy and sell signals are fed intersections above and below the moving average. He was given a short-term signal to the sale in August 1998. and buying the wrong signal in November 1999. Both of these signals occurred when the trend began to weaken Enron. Although most, this simple method to keep the investor in the direction of movement of bovine.

The third way to determine the trend based on the short moving average on the longer moving average. If a short Moving Average is above a long moving average, the trend is considered the bottom-up. If short Moving Average is lower than the long moving average - the trend is considered to be top-down.

For Xircom, in determining the trend of using the intersection of 30 - and 100-day moving averages. When the 30-day Moving Average moves above 100-day moving average, the trend believe bovine. When the 30-Day Moving Average falling below the 100-day moving average, the trend is viewed as bearish. The differential between them is shown below the price chart using a percentage-price oscillator (PPO) in plants (30100.1). When the differential of the positive, the trend is considered to be bottom-up - when the negative trend of top-down view. As with all of the following systems for the trend, the signals work well when the tool is developing a strong market trend, but are ineffective when the instrument is traded in the range. Also note that the signals have a tendency to lag, and served as the movement has already begun. Once again, following the trend indicators are best suited to determine and confirm the trend, rather than forecasting.

Levels of support and resistance
Another use of moving averages is to determine the levels of support and resistance. This is usually done using a moving average and is based on historical precedent. As with the definition of trend, level of support and resistance using a moving average works best on the market trend.

After the commercial breakthrough band Sun Microsystems successfully tested support moving average in late July and early August. Also, please note that breakthrough in June in the vicinity of 18 resistance turned to support. Therefore, the rolling average has acted as a confirmation of turning resistance in support. After this first test, 50-day rolling average has been 4 successful testing in support over the next few months. Breakthrough support for 50-day moving average would serve as a warning that the action can go to the trading range, or may begin a change of trend. That breakthrough came in April 2000. and 50-day SMA in the same month, has turned into resistance. When the event broke above the 50-day SMA in early June 2000. She returned to the level of support to the breakthrough in October 2000. In October of 2000. 50-day SMA has become a drag, and it lasted for many months.

Moving averages in graphic programs
Moving averages are available in almost all graphics programs. You can choose either Simple Moving Average, or exponential moving average cost. Typically, the first right box is used to determine the number of time periods. During the afternoon schedule, the value of 50 would be consistent with the 50-day moving average. On a weekly schedule, the same value corresponds to 50-week moving average. Moving averages are based on closing prices and the price schedule can be built a few moving averages.

Conclusion
Moving averages can be effective tools to identify and confirm the trend, determine the levels of support and resistance, and the development of trading systems. However, traders and investors must learn to identify market-based tools for analysis which can be used as a sliding average, and this analysis should be applied. Typically, the assessment can be made a visual study of the schedule, but sometimes it requires a more detailed approach. Indicator of the likely direction (ADX) is a tool that can help determine what tools to develop the market trend, and what does not.

Advantages of using moving averages must be compared with their disabilities. Moving averages are indicators, following the trend or delay indicators, which will always lag behind price movements. This is not necessarily a bad thing. Eventually, the trend - your best friend and trading in the direction of the trend. Moving averages can help to confirm that the trader has acted in accordance with the current trend. However, market-based instruments hold a lot of time, selling in the ranges that make Moving averages ineffective. If there is the trend, the sliding average will keep you in it, but later served signals. Do not expect that, using the sliding average, you'll buy at the bottom and sell at the top. As with most tools of technical analysis, Moving averages should not be used separately and in combination with other tools that will complement them. Using moving averages to confirm other indicators can significantly improve the effectiveness of technical analysis.

based on Stockcharts.com