Technical analysis prediction technique by fdjerue7eeu


									Technical Analysis Forecasting technique

?Technical analysis is to conduct their own analysis of the market to
predict changes in the direction of market prices, that is mainly for
day to day trading the futures market the state, including price
changes, trading volume and open interest changes, etc., plotted in
chronological order according to graphics or chart, or a certain
system of indicators, then these graphs, charts or indicators of
system analysis, to predict the futures price trends.
(A) technical analysis of the three assumptions
Theoretical basis of technical analysis is based on three reasonable
assumptions: market behavior reflects all; price trend changes were;
History repeats itself.
1, to reflect all market behavior
This is the basis of technical analysis. Technical analysts believe
that a commodity futures prices can affect any factors - based,
political, psychological or any other aspect of the - actually being
reflected in its price. It follows then that we have to do is to study
the price changes. This premise is in fact the substance of the change
in price will reflect supply and demand, if demand is greater than
supply, prices must rise; if the supply is too demand, prices will
inevitably drop. Supply and demand of all the starting point of
economic forecasting. It upside down, then, as long as the price
rises, whether because of any specific reason, demand is outstripping
supply, from the economic base that must be optimistic; if prices
fall, say from an economic basis, must be bearish. End, technical
analyst is only indirectly through the price change of fundamentals.
Most technology camp will agree, is a product of supply and demand,
that fundamental decision of the bullish or bearish commodity. Chart
itself does not lead to the ups and downs, but simple demonstration of
the market's optimism or pessimism prevalent mentality.
Chart the price fluctuations to send usually ignore the causes and
trends in the prices of the early formation of the market is at a
critical turning point, or when the market is often no one know
exactly why such and such an odd action. It is precisely in this
crucial moment, technical analysis are often inventive, in the phrase.
Logical, since all the factors that affect the market price ultimately
will be reflected by market prices, then the price of enough research.
In fact, the chart is only through research analyst price chart and a
large number of supporting technical indicators, let the market reveal
its most likely the trend, and not with his shrewd analyst to
"conquer" the market. All future discussion of technology
tools is only an aid. Technical school course, the market fluctuations
certainly have reason to know, but they are predicting that these
factors are irrelevant.
2, showed a trend of price changes
"This is a technical analysis of the most fundamental core
factors. Of the full significance of price charts is a trend in the
development of early, timely and accurate manner revealed it to
achieve the down trend in trading purposes. Fact , technical analysis
is to conform with the trend in essence, that is to determine and
follow an established trend for the purpose.
From the "way of the evolution of prices to trend" can be
automatically inferred, for an established trend, the next step often
is the direction along the existing trends continue to evolve, but
much less likely to reverse U-turn. This of course is the application
of Newton's law of inertia. You can also put it another way: current
trends will continue until turned back so far. Although this statement
is almost tautological, but want to emphasize here is: an established
firm to adapt to the trend, until the reverse of the sign up.
3, history will repeat itself
Technical analysis and market behavior and human psychology are
inextricably linked. Such as price patterns, their price charts
through a number of specific shape shown, which are graphical
representation of the people of a bullish or bearish market
psychology. In fact, these graphics in the past several hundred years
are fairly well known, was to categorize them. Since they are very
useful in the past, they might think they are equally effective in the
future, because they are based on human psychology, and human
psychology has always been a "leopard can not change his
spots." "History will repeat itself," be specific point
is that the key to open the door to the future hidden in history, or
future reproduction of the past.
Under the three assumptions, technical analysis had its own
theoretical basis. The first confirmed the behavior of the market
means that full consideration of all factors affecting the price, the
second and third laws allow us to find the futures market can be
applied to the actual operation.
(B) the technical analysis of the elements: price, trading volume and
open interest
Futures prices the main basis of technical analysis indicators are
opening price, closing price, highest price, lowest price, volume and
open interest.
1, Open: 5 minutes before the opening call auction produced prices.
2, closing price: the final day of a transaction price of.
3, the highest price: the date of the highest transaction price.
4, the lowest: the lowest trading price of the day.
5, volume: trading in a certain time, a commodity futures contracts
traded at the exchange amount. In domestic futures market, trading
volume calculated the amount used to buy and sell both the and.
6 positions: refers not to buy or sell hedge, and after the physical
delivery of a number of commodity futures contracts, also known as
open interest, or amount of disk space capacity. Open interest of
buyers and sellers are equal, positions but the number of buyers and
sellers together. If both parties are the new opening, the two
contract positions to increase capacity; if one party for the new
opening, the other is open, the positions remained unchanged; such as
buyers and sellers are closing out positions by 2 a contract amount.
When the next open position, opening number and the same number, the
positions are unchanged.
As the positions from the kinds of futures contracts started trading,
to the calculation of the positions have not only this time the number
of hedge contracts settled, the greater the open interest, before the
expiration of the contract volume and open interest the total amount
of physical delivery greater, the greater the trading volume.
Therefore, the change of positions can be speculated that the flow of
funds in the futures market. Positions increased, indicating that
capital inflows futures market; contrary, it indicates outflow of
funds futures market now.
(C) of the volume, the relationship between positions and prices
Changes in trading volume and open interest will affect the futures
price, futures price changes will lead to changes in trading volume
and open interest. Therefore, to analyze these changes help predict
futures price movements correctly.
1, volume, open interest increases, prices rise, said the new buyer is
a large number of acquisitions, the near term prices may continue to
2, volume, open interest decreased prices, said the large number of
replenishment open short sellers, prices shortly, but will probably
drop soon.
3, turnover increased prices, but the positions reduced, indicating
short sellers, and all who buy a lot of open space, prices will fall
4, volume, open interest increases, prices fall, that a lot of short
sellers to sell contracts in the short term prices may fall, but if
sold over the anti-likely keep prices high.
5, volume, open interest to reduce prices, and that a large number of
anxious sellers who buy open space, short term prices will continue to
6, volume increases, positions and prices, that short sellers who were
using to buy more open leads to lower prices benefit the occasion
after another replenishment open, prices may rise to.
Can be seen from the analysis, in general, if the trading volume, open
interest and prices in the same direction, the price trend may
continue for some time; as both reverse and price, the price trend may
shift. Of course, this price needs to combine different forms for
further detailed analysis.
(Iv) the use of technical analysis
In price, based on historical data volume statistics, math, charting
method is the primary means of technical analysis. This sense,
technical analysis can be many. No matter how technical analysis is
produced, people are most concerned about its usefulness, because our
aim is to use it to predict future price movements, so as to
investment decision making.
Technical analysis as an investment analysis tool, the application
should note the following issues:
1, technical analysis and fundamental analysis should be used in
combination in the domestic futures market, technical analysis had a
higher success rate. However, the use of technical analysis must pay
attention to combining fundamental analysis. The terms of commodity
futures, futures prices of the underlying factors restricting the
commodity's supply and demand, and fundamental analysis of supply and
demand is just starting to. Therefore, technical analysis and
fundamental analysis should be used in combination.
2, note that a variety of technical analysis methods of synthesis
judged, avoid one-sided use of a certain kind of technical analysis.
Investors should fully consider all methods of technical analysis of
future projections, the results obtained by combination of these
methods to work out a reasonable balance of power in the long and
short sides of the Miao Shu. Proved a technical analysis alone there
is a big limitation and blind. If the application after a variety of
technical analysis methods are the same conclusion, then the chance of
error to this conclusion based on very small, but only by a method
concluded the chances of error large. In order to reduce their own
errors, as many as possible to master a number of technical analysis.
3, previous conclusions and those of others through their own practice
can be safely used after authentication.
As the futures market can give rise to great gains on the futures of
people hundreds of years of endless analysis in different ways, using
the same method of styles. Their predecessors and others have
concluded that in certain special conditions and specific conditions
get, as the market environment changes, the success of our
predecessors and other methods of their use may fail.
(E) Graphical Analysis
Graph provides a summary of the price history of any trader, this is
the most basic elements of information. Graphics can give traders the
market volatility a good sense of drive, which is expected to risk is
important. Graphics can be used as a selection tool for market timing,
fundamental analysis of the use of traders have to apply the graphics
to determine timing. Graphics or a funds management tools that can be
used to determine the specific stop price. Graphics reflect the market
behavior, especially the type of duplication.
Dealers to form a set of valuable technical trading systems, master
graphical analysis is a prerequisite. In technical analysis, graphical
analysis is the most important, the most common analysis methods,
including the following three basic price graph.
1, K line graph
K line graph that charts the source in Japan, was the Japanese rice
market traders used to record the rice market price and price
volatility, standard after its original fine art form was introduced
into the futures market and the stock market. As this method draw out
the shape resembling a candle chart, also known as candle chart. K
line in the figure, vertical axis represents the price, the horizontal
axis represents time. Varies according to time, K chart can be divided
into time-sharing graph, day chart, weekly chart, on graphs, etc. K
line mapping is relatively simple to daily charts, for example, two
cutting-edge, in the shadow is on the line, the next is the next video
line, representing the day's high and low, intermediate similar to the
rectangular candle, then show that the opening price and closing price
of the day. Figure 1 below, the record low of market opening higher,
the closing price is greater than the opening price, known as Yang
Xian; in the figure, the solid part of the white, said. Figure 2
below, the record high open market conditions of low income, that
opening price is greater than the closing price, called the Yin Xian;
in black and white diagram, entity, said some black. As the daily
price fluctuations are different, so every day or Yang Xian Yin Xian
appear in different shapes. To enhance visual effects, usually red for
Yang Xian, Blue Yin Xian. Observed K chart, can clearly see that day
market conditions, "Open High Low income" or
"low-income high-opening," the image is bright, intuitive
Figure 1: Yang Xian
Figure 2: Yinxian
In the analysis of K line graph form, in addition to attention to its
basic form, we must also note the following:
First, we must pay attention to the shadow line under the shadow line
and the length of relationship. When the shadow line under a very long
and very short shadow, shows that the market power of a strong seller,
the buyer shall be suppressed; immediately hatched a very long and
very short upper shadow, indicating the market's stubborn against the
seller by the buyer.
Second, we must pay attention to physical parts and the relative
levels hatched the ratio between the length, thus to analyze the power
of buyers and sellers.
Third, we must pay attention K in which the price chart area. K line
for the same form, when there in different places, their meaning and
interpretation of different or even opposite. For example, K Line
entities up and down the line with a long shadow, if there is increase
in price in the end, it generally means that the formation of high
price; if the market in late fall, there will usually mean that the
reserve price.
Another example is hatched up and down the hammer and Yin Xian Yang
Xian hammer, such as in high-price, general market outlook indicates
that transfer or, if it appears in the low-cost, generally indicates
bullish. Thus, for K chart analysis, we should observe Yinxian or
Yangxian length ratio between the various parts of relations and the
yin-yang line combinations in order to determine the strength of
growth and decline buyer and seller to determine price trends.
Two, bamboo line graph
Bamboo line graph price map simplest. According to different periods
of time, can be divided into time-sharing plan, on plan, weekly plan,
monthly maps. A Case Study with Japanese bamboo line (see Figure 3),
each trading day by a day of high and low to connect the vertical line
that day and the opening price by a vertical line intersects the left
vertical line of short dashes in said; day closing price and by a
vertical line intersects the right vertical dashes in that (usually,
the opening price omitted).
Figure 3: The Bamboo line graph
(6) homeopathy and for the
1, the definition of trend
The technical analysis of this market research method, the trend is
definitely the core of the concept. Chart all the tools used by
analysts, such as support and block level, price patterns, moving
averages, trend lines, etc., whose sole purpose is the support we
assess market trends, which follow the direction of the trend to do
transactions. In the market, "always follow the trend of
trade," "not irreversible trend of moving" or
"trend that Companion," and so, it is already commonplace.
Therefore, we will take some effort, to trends in the definition and
From the general sense that the trend in the direction of the market
is where to go. However, in order to facilitate practical application,
we need a more specific definition. Under normal circumstances, the
market will not move in any direction straight to the market movement
characterized by winding, its path resembles a series of endless
waves, with very distinct peaks and valleys. The so-called market
trends, it is followed by peaks and troughs in the direction of
increase or decrease posed. Whether these peaks and valleys are
followed by ascending or descending order, or lateral extension, the
direction of market trends on the form. So, we rise up in turn defined
as a series of peaks and troughs; the decline is defined as a series
of descending peaks and troughs; the horizontal extension of the trend
in turn is defined as a series of horizontal extension of the peaks
and valleys.
Two, the trend in three directions
We call up, down, horizontal extension of three trends are sufficient
grounds. Many people are used on only two trends that the market
direction, either up or down. But in fact, the market has three
directions of movement - up, down and horizontal extension. Only in
respect conservative estimates, at least one third of the time, the
price at the level of extension of the pattern, are the so-called
trading range, so very important to clarify this distinction. This
situation shows that the level of stretch, the market for some time in
equilibrium, that is, in the above price range in the strength of
demand and supply sides to achieve a relative balance. However, while
we have such a balanced market is defined as horizontal extension of
the trend, but the more popular sayings are "no trend."
Most of technology tools and systems are conform with the trend in
nature, and its main design intended to follow the market up or down.
When the market into this balanced or "no trend" stage, they
tend to perform poorly, or simply does not work. It is precisely in
the horizontal extension of the period of such market, trends,
investor most vulnerable to setbacks, the people who use trading
systems suffered the biggest losses. As the name suggests, conform to
the trend of the system, the first trend must follow before you can
display their functions. Therefore, the root causes of failure is not
the system itself, but rather investors, investors operator error, the
design trend of market conditions in the work of the system, applied
to the trend of the market environment has not had.
Futures Investors have three choices - first to buy after the sale (so
long), the first sell-buy (so short), or hand over contemplation. When
the market is rising, first to buy after the selling of course is the
best policy. The decline in the market when the second option is
preferred. Logical extension of the time Fengdao horizontal market, a
third way - over to contemplation - is usually the most sensible.
3, the trend with three types (scale)
Trend not only has the three directions, and often can be divided into
three types. These three types are the main trends, secondary trends
and short-term trends. In fact in the market, covering a few minutes
or hours from a very short trend began, to last 50 years or 100 years
very long-term trend up, at any time the trend of numerous large and
small coexist, a common effect.
4, the trend line
The so-called trend line is the rally in the connection of two or more
low and down market in more than two high points of connection, the
former is called an upward trend line, which was known as the downward
trend line. Rising trend line is meant to show support at higher
prices, once the process of price fluctuations below this line, it
means the market may be reversed, by the up turn down; downward trend
line is meant to show price drag down the process of recovery, once
the price fluctuations in the upward break in this line, it means that
prices could climb back up.
Investors draw the trend line should note the following:
(1) the trend line according to the length of price volatility into
long-term trend line, the medium-term trend line and short-term trend
line, long-term trend line should be selected as long-term point of
drawing a line based on fluctuations in the medium-term trend line is
the connection point of the medium-term fluctuations, The proposed use
of short-term trend line for 30 minutes or 60 minutes K volatility
chart connecting points.
(2) draw the trend line should be drawn as the first line of the
different experimental until the price changes over time, proven
reserves to reflect the fluctuations in the trend of significance with
the trend line.
(3) the trend line amendments. Upward trend in line with the
amendments, for example, when the price fell below the trend line
rising rapidly after the return to the trend line, should one of the
original use of low connected with a new low, is amended by the new
rising trend line , to more accurately reflect price trends.
(4) should not be too steep trend line, it will be very easy to break
sideways, lost of significance. To decide the trend line, trend line
should be wary of making the main use of "trap." In general,
there is no break in the price trend line before the rising trend line
support each fall, the downward trend line is the price of each
pick-up resistance. When prices break the trend line, if there is gap,
reverse the trend likely to occur, and occur after the price trend
reversal has some strength. Price trend line break down the resistance
increases, with normally take a large volume, while the price of an
upward trend line break down, the volume generally will not enlarge,
but within a few days after the breakthrough volume rapidly enlarge.
(7) view map of potential
1, the price patterns
And its gestation period of this forecast is the price patterns of
significance to be addressed. So, what is the price of what form?
Price of the stock or futures price pattern is a specific chart
patterns or patterns, they have predictive value, we can put them
Two, form has two categories: Anti-transformation and continuous type
There are two most important price patterns Category - Anti-transition
patterns and persistent form. Reversal pattern worthy of the name,
means that an important trend reversal is taking place; the contrary,
continued to shape that the market is likely to only be temporary for
a period of rest, the recent adjustment of overbought or oversold
condition some, after the existing trend will continue. The key is to
be formed in the shape determine the course of its own type as soon as
Volume in all price pattern, have played an important role in
verification. In the situation unclear, look at price data associated
with the volume form, is to judge the reliability of the current price
form a decisive way. Most forms have their own specific price
calculation technique for determining a minimum price target. Although
these objectives is the next market movement is only approximate
estimates, it is still help investors determine a risk reward ratio.
3, persistent form
Persistent form, including the triangle, the flag and pennant-shaped,
wedge, and rectangle. Such patterns often reflect the current trend is
in a resting state, rather than reverse the trend, therefore, often
summarized as moderate or minor form, not really the main form.
4, reversal patterns
Reversal patterns include a single day (even days) reversed, complex
head and shoulders, triple top (bottom), double top (bottom), head and
shoulders bottom, head and shoulders, round the top. Such patterns are
usually the end of that old trend, the formation of a new trend. The
trend in terms of traders, identify reversal patterns is very
important. The event of a reversal pattern, the trend traders should
immediately make a contrarian decisions.
5, reverse form the basic elements common to
(1) the need for pre-existing trends
The market does have a trend reversal pattern is the existence of all
the prerequisites. The market must first have a clear tendency, then,
can we reverse. On the chart, occasionally there are some reversal
patterns similar to the graphics, but if there was no prior trend,
then it has nothing to counter, which is of limited importance. We are
in the process of identification forms, correctly grasp the trend of
the overall structure, targeted to the most likely stage some form of
vigilance is the key to success. Because of a trend reversal pattern
prior to be anti, so it was with a measure significance. Most
measurement techniques give only the minimum price target. Then,
reverse the greatest goal be? It means that the starting point of the
trend, and its end is back to its starting point. If the market
occurred in a major bull market, and the major reversal patterns have
been completed, it indicates that the greatest room for downward price
movement is the 100% retracement of the bull market.
(2) important trend line break
An impending reversal process, often to break the trend line for the
important precursor. But friends, please remember that the main trend
line is broken, does not necessarily mean that the trend reversal.
This is the meaning of the signal itself, the original trend is
changed. Main up trend line is broken, the lateral extension may be
that the price of forms began playing later, with further
developments, will we be able to confirm the anti-shape or a
continuous transition. In some cases, the main trend line was broken
with the completion of forms is just the price synchronization.
(3) form larger, the greater the subsequent market action
Here the so-called large or small, is the price patterns in terms of
the height and width. A high degree of volatility indicates the
strength of form, while the width represents the completion of the
forms from the development to the amount of time spent. Larger form -
that is the price swings within the scope of Form (height) greater
experience of time (width) longer - so the more important of the form,
followed by the greater scope for the price movement .
(4) the difference between top and bottom
Form the top and bottom morphology compared to "ding" But
the volatility of short duration more. Form at the top, the price
volatility not only substantially greater and more intense, shorter
time of its formation. The bottom of the form usually have smaller
price fluctuations, but spent a long time. For this reason, identify
and capture the market to capture the top than the bottom, usually
come easier. Correspondingly less damage. But for like "top
pressure" of friends, there is little comfort can be owned, that
price usually tends to rise faster or slower, and therefore difficult
to deal with the top shape though, it also has its own attractions.
Typically, investors capture the bear market of the selling
opportunity to seize the bull market when buying opportunity than when
profits much faster. In fact, everything is the balance between risk
and return. Higher risk from the higher returns in compensation and
vice versa. Although it is difficult to capture top form, but also
more potential profit.
(5) trading volume in the verification break up even more importance
when the signal
Volume trends in the general direction should be along the market to
grow accordingly, which is to verify whether all the price of forms to
complete an important clue. After the completion of any form should be
accompanied by a significant increase in trading volume. However, the
trend of the top of the inversion process in the early days of trading
volume is not so important. Once bear sneaked into the market are used
to "decline due to self-respect." Who of course want to see
the chart analysis, the prices have fallen, trading activity and more
active, but, in the top of the inversion process, this is not the key.
However, in the bottom of the inversion process, the corresponding
volume expansion, it is absolutely necessary. If the break when the
price up when the volume form does not show significant growth trend,
then the reliability of the price form, it should be suspicious.
(8) technology with the potential
1, the definition of Moving Average
This moving average technical indicators, the most flexibility for the
widest. Because its structure is simple, and it is easy to quantify
the test results, it constitutes most of the automatic trading system
adapt to trends in the operational base. As the "average"
within the meaning of the word, it is a recent 10-day average closing
price of the arithmetic. Called "mobile", essentially means
that we in the calculation, always use the last 10 days of price data.
Therefore, the array is the average (last 10 days closing price) as
the new trading day change, day by day onward. When we calculate the
moving average in the most common approach is to use a recent 10-day
closing price. Our daily closing price of the new join the array, and
forward the first 11 months last closing price was Tiqu. Then, the sum
then divided by 10 new, get a new one-day average (10 days average).
2, moving average: a lag characteristics of the smooth tool, moving
average is essentially a tool for tracking trends. The aim is to
identify and show the old trend has ended or reversed, the new trend
is a key opportunity for initiation. It is their responsibility to
track trends in the process.
Moving average is a smoothing tool. Short-term averages are more
sensitive to price changes, while long-term moving average is more
slow. In some markets, with more favorable short-term moving average.
In other occasions, long-term average was able to realize their
3 simple moving average
The so-called simple moving average, that is the arithmetic mean, it
is the most commonly used.
4, linear weighted moving averages
To solve the above-mentioned weight, it was proposed "linear
weighted moving average" concept. In this algorithm, if for 10
days on average, for example, then the first 10 days of the closing
price is multiplied 10 times 9 days 9, 8 days is multiplied by 8, and
so on. Thus, after more by the closing price of the greater weight.
Calculation in the next step, we divided by the sum of its multiplier
and (in this case 55:10 +9 +8 + ... ... +1 = 55). In any case, linear
weighted average method is still not resolved the first question, that
it includes only the average price of mobile range.
5, the combination of moving average
Most of those who use the double moving average, or a combination of
three moving average. Among them, all the average closing price be
called by. The most commonly used moving average number of days for 5
days, 10 days, 20 days and 40 days, or some modifications of these
figures (eg 4 days, 9 days, 18 days). A variety will be a group of
futures the best moving average line, choose the best combination of
moving average, need complex computer operations, the current
investors in general difficult to achieve. However, investors can be a
variety of moving average futures portfolio compared estimated choose
their own, optimized moving average combinations.
6, the principle of moving average trading
Use of moving average trading generally in are:
First, when the closing price higher than the average purchase;
closing price below the average selling time;
Second, when the market price from the bottom up, beyond the average
time to buy; when the price of top-down, below the average selling
Third, the length of time using two different moving average trading.
When the short-term moving average line from the bottom up, up over
time to buy long-term moving average; if top-down short-term moving
average, fell below long term moving average time to sell;
Fourth, if the closing price higher than the short-and long-term
moving average line two hours to buy that when a price lower than the
average time which immediately open; When the closing price of less
than short-term and long-term moving average time the two sell When
the price was higher than average when one open so soon.
Use of moving average trading common feature is focused on the basic
trend, ignoring temporary fluctuations in the price disadvantage is
resilience not work.
(9) random index
1 What is the random index
When the market has entered a not Qushi stage, prices are generally
fluctuated in a range, in which case the great majority follow the
trend analysis systems are not working properly, and random targets
are unique. Therefore, technology-based investors, random target the
right remedy, so that they can often arise from trends in the market
environment without profit.
2, the significance of random targets
Stochastic trend must be ancillary to the basic analysis, this sense
that it is only a secondary indicators. Market's major trend is
overwhelming, and along its direction of transactions of this
principle is important. However, in some cases, random indicator has
its strengths. For example, a significant trend in coming, the random
index analysis is not only less useful, or even investors astray. Once
near the end of the market movement, random target on the most
3, the three most important indicators were used
There are three cases, the most of random utility. Three cases the
vast majority of random targets are common.
(1) When the random index value reached on the boundary or the lower
boundary value, the most meaningful. If it is close to the border, the
market in the so-called "overbought condition"; if it is
close to the lower boundary, a market in so-called "oversold
condition." The two readings of all signals that the market trend
goes too far, started some vulnerable.
(2) When is the limit random target location, and price changes were
between the index and mutual departure from the phenomenon, often
constitute an important early warning signal.
(3) If the random target along the direction of market trends across
the zero line, may be important trading signals.
4, several random index
Dynamic stochastic indicators index (MTM), the rate of change index
(ROC), Swing Index (OSC), Relative Strength Index (RSI), stochastic
index (K% D), William Index (% R), etc.. Now describe some of the
major targets of random.
(1) Relative Strength Index (RSI)
Relative strength index reflects the strength of market momentum
indicator, which over time by calculating the price of a contract when
buying accounts to buy and sell throughout the market share of total
contracts, to analyze market overbought and over long and short
selling and market forces against the trend, which judgment trading
According to the number of days sampling can be calculated a variety
of RSI, such as 6, RSI, 12 ÈÕ RSI, 24 ÈÕ RSI. Usually they use a 6 RSI.
RSI values from 0 to 100. The larger, indicating weaker air market
selling, buying stronger; value is smaller, weaker market, buying,
selling air stronger. Generally, RSI values of more than 75, or 80 as
the overbought zone, less than 20, or 25 as the oversold zone.
Usually RSI values and moving average, K line map drawing together, a
moving average line or K line graph observations of market trends, to
chart RSI value of changes in market forces buyers and sellers,
complement each other. RSI values using technical analysis of those
plans is of most importance and RSI values deviated from the map. When
the new high RSI value below the price line before the high point was
that the rise may be reversed, when the RSI down to previous lows will
be a foregone conclusion when the reversal. Reversal of the judge
declines the opposite. However, the relative strength index measuring
the use of city, in addition should be noted that departure from the
trend, we must also note that because of the relative strength must
Weak overbought oversold index has entered the market area will be
blind. Because, in the overbought oversold area, and sometimes even
slight fluctuations in the relative strength index, prices rose or
fell may continue. In other words, in the "one-sided" the
market, the relative strength index may be disturbed.
(2) KD line
KD line refers to the K line and D line changes to show a combination
of technical indicators the market price changes. K value is the
current closing price in the current difference between the poles of
high and low relative proportions. Displays the current market price
of the high proportion of bias close to the high proportion of low
shows the current bias close to the low market price, by the level of
change in value, can explain the internal dynamic of change in market

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