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Friday, September 23, 2011

TECHNICAL analysis

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

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