My Diary.
to Share my Life Events

Why technical analysis failed?

NewImage
There is no technical analysis that can be 100% correct all the time. It is a biggest mistake for beginer trader to trust 100% of reliability and accuracy to technical methods. You main goal is to make money and not to be mathematically correct. Good technical analysis should help your make more money than losing money. You goal is to earn money more than the benchmark in the market. Technical analysis is about making extraordinary profit. Technical analysis is a skill that need time and experience to learn. You need to match your personality and trait with your technical analysis skill. Technical analysis is about pattern in the random number and it is all about timing. So enjoy your technical analysis tutorial here and we hope that it will help beat the market.
Admin Admin Author

How On Balance Volume (OBV) may show how money may be flowing into or out of a stock


OBV (On Balance Volume) measures buying and selling pressure. It was develop by Joe Granville in 1963. Joe Granville predict that volume precedes price.

OBV Calculation.

If the closing price is above the prior close price then:
Current OBV = Previous OBV + Current Volume
If the closing price is below the prior close price then:
Current OBV = Previous OBV  -  Current Volume
If the closing prices equals the prior close price then:
Current OBV = Previous OBV (no change)


It is very easy to use OBV. A rising OBV value show positive volume pressure that can lead to higher prices and vice versa.
Admin Admin Author

Chaikin Oscillator is an indicator for indicator



Chaikin Oscillator  is develop by Marc Chaikin. Its measures the momentum of the Accumulation Distribution Line using the MACD formula. 


Calculation

1. Money Flow Multiplier = [(Close  -  Low) - (High - Close)] /(High - Low)
  2. Money Flow Volume = Money Flow Multiplier x Volume for the Period
  3. ADL = Previous Accumulation Distribution Line + Current Period's Money Flow Volume
  4. Chaikin Oscillator = (3-day EMA of Accumulation Distribution Line)  -  (10-day EMA ofAccumulation Distribution Line)

Since Chaikin Oscillator is an indicator for indicator, it can be use to confirm other indicator such as RSI and MACD. Generally, buying bias is stronger when the indicator is positive area and selling bias is stronger when the indicator is negative. You can look for  crosses into positive area for bullish divergences and  negative area for bearish divergences.  Chaikin Oscillator  is not a stand alone indicator. You should use other indicator to confirm its buying or selling trend.
Admin Admin Author

How Chaikin Money Flow (CMF) to indicates buying and selling pressure



Marc Chaikin is a developer of Accumulation Distribution Line and also Chaikin Money Flow indicator.  Chaikin Money Flow indicator measure the volume of money flow over time that simply sums Money Flow Volume for 20 or 21 days.

Calculation based on 21 days.

1. Money Flow Multiplier = [(Close  -  Low) - (High - Close)] /(High - Low)

2. Money Flow Volume = Money Flow Multiplier x Volume for the Period

3. 201-period CMF = 201-period Sum of Money Flow Volume / 20 period Sum of Volume


Interpretation of Marc Chaikin is based on oscillator. A move into positive chart indicates buying pressure, while a move into negative chart indicates selling pressure. You should add buffer below and above zero line to avoid noise signal.  You can set threshold a little above zero (+0.05) for buying signal and below zero (-0.05) for selling signal to reduce bad signal and reduce whipsaws. You can use Chaikin Money Flow as supporting indicator for RSI and MACD.


Admin Admin Author

What happen when Coppock Curve cross above or below zero line?



Coppock Curve is a momentum indicator develop by Edwin “Sedge” Coppock, October 1965. Coppock used long term monthly data to identify buying or selling opportunities.  Coppock Curve use 10 day period of WMA , 14 day period of Rate of change and  11 day period of Rate of change. 
Coppock Curve = 10-period WMA of 14-period RoC + 11-period RoC
WMA = Weighted moving average
RoC = Rate-of-Change

It is  very easy to interpret Coppock Curve because its use monthly data and there is not much signal. You can use this Coppock Curve to signal bear or bull market in the long term. Most signal happen when coppock curve cross above zero line. When Coppock curve cross above zero its signal bull market and when its cross below zero its signal bear market.


Admin Admin Author

How to use Commodity Channel Index (CCI) to indentify new trend

Commodity Channel Index (CCI) is an indicator develop by Donald Lambert. CCI is use to identify new trend and warn an extreme price.  CCI is high when the price is far above the average price. CCI is low when the price is far below the average price. Just like RSI indicator, it can also be use to measure overbought and oversell.




How to use CCI to identify new trend? Most of the activity in CCI happen between -100 and +100. When the CCI go beyond +100, its indicate strength and signal emerging new uptrend in the future. When the CCI go below -100, its indicate weakness and  foreshadow an extended downtrend in the near future. It is also can be use as bullish bearish divergences that signal  a potential reversal point
How to calculate CCI


CCI = (Typical Price  -  20-period SMA of TP) / (.015 x Mean Deviation)
Typical Price (TP) = (High + Low + Close)/3
Constant = .015
Admin Admin Author

How to use Average True Range (ATR) to measure volatality



Average True Range (ATR) is an indicator developed by J. Welles Wilder. It is design to measures volatility. ATR is calculated based on 14 days. Its formula is

Current ATR = [(Prior ATR x 13) + Current TR] / 14
  - Multiply the previous 14-day ATR by 13.
  - Add the most recent day's TR value.
  - Divide the total by 14
Unlike MACD or RSI that give you buy or sell signal. ATR indicator is a unique way to measure the volatility of the stock. You can use ATR to measure the enthusiasm behind a move , reversal or breakout. You can use ATR show strong buying pressure or strong selling pressure and confirmr the interest or disinterest in a move of stock price.
Admin Admin Author

How Aroon indicator detect if a stock is trending or not



Aroon is a technical indicator to detect if a stock is trending or not. Its also can be use to measure the strength of the trend. Aroon is designed to detect te beginning of a new trend. There is two type of Aroon, Aroon Up and Aroon Down.

Arron is calculate based on the following formula:

Aroon-Up = ((25 - Days Since 25-day High)/25) x 100
Aroon-Down = ((25 - Days Since 25-day Low)/25) x 100



It is easy to interprate Arron, it is a buying signal when Aroon up and above 50 and Aroon down is below 50. It is also selling signal when Aroon Up is below 50 and Aroon Below is above 50. A surge to 100 is sign that the new trend may emerging.

Admin Admin Author

How to use Money Flow Index (MFI) indicator to warn of unsustainable price extremes?

Money Flow Index (MFI) indicator is a momentum oscillator tied to volume. It is also known as a volume-weighted RSI because RSI formula is applied to create a volume-weighted indicator. Money Flow Index (MFI) is suited to identify reversals as it is interpreted similar to RSI.



You can look for overbought (above 80) or oversold(below 20) levels to warn of unsustainable price extremes. 

You can also check if a price move above 90 as and indicator as a  truly overbought and a move below 10 is truly oversold. Moves above 90 and below 10 are very rare and you should take action to buy or sell.




Admin Admin Author

How to use Accumulation Distribution Line to detect buying or selling pressure ?



The Accumulation Distribution Line can be used to measure  the general flow of volume.It can be use to determine the flow of money into or out of a stock.


How to Interprate AD line Indicator?

When the AD line show uptrend, its indicates that buying pressure is prevailing. When the AD line show downtrend, its show that selling pressure is prevailing.


AD line is not a standalone indicator, you should use other indicator to confirm the price action such as Relative Strength Indicator.



Admin Admin Author

How to use Williams %R momentum indicator to detect oversold or overbought?


Just like stochastic oscillator indicator,  Williams %R is a momentum indicator. It is develop by Larry Williams. Just like RSI indicator. You can use Williams %R momentum indicator to detect oversold or overbought. It is range from 0 to -100.

It is useful to scale oversold (-100) and Overbought (0).  When the oscillator reach -100 or zero it is time to watch the price action. 

Its can generate false signal and should be use with other indicator such as RSI.
Admin Admin Author

How to use RSI Indicator as buying or selling signal

RSI indicator is among the famous and popular technical indicator.  Generally speaking, RSI is an oversold and oversell technical indicator. When the reading is above 70 its is consider as oversold and when it is below 30, it is consider as oversell.

Most people will go short when the graph is go beyond upper line (RSI above 70) and go long when the graph is go below border line (RSI below 30).RSI momentum generally favor the buying (uptrend) when the indicator is above 50 and the selling (downtrend) when below 50.

source: Investing .com

RSI Tips..

1. You should always focus on failure swing point as confirmation.
2. You should see how price has retreated versus the retreat of the rsi.
3. RSI's best friend is William % R indicator.
Admin Admin Author

How to use MACD indicator

Moving Average Convergence Divergence (or MAC indicator) is developed by Thomas Aspray in 1986. It is the most popular indicator used in technical analysis.

 Example of MACD of GOOGL
 
Credit to investing.com

The best way to use MACD is to use it as a buy and sell signal. When the Blue Line Intercept with the Red line and moving uptrend it is a buy signal. When the Blue line intercept with the red line and moving down trend it is a sell signal.


Admin Admin Author

iMalaysia Stock Market Version 1


iMalaysia Stock Market version 1 is an application that lets to track, monitor and research the stock in Bursa Malaysia.
Admin Admin Author