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May 23, 2008 at 2:36 pm
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Volume is a measure of supply and demand that is independent of price
Volume is usually light during the formation of the pattern and increases on a breakout from the pattern. For any pattern or trend line penetration, a breakout with increasing volume is more an indication that prices will continue in the direction of the breakout than a breakout on low volume.
Rising volume levels when price is falling after a major peak gives supporting evidence that there is an underlying weakness in the security & warns that falling prices may continue.
When price goes to a new high on increased volume, traders often compare volume with that which occurred during previous rallies in prices. If the current volume is less than the previous rally’s volume, there is a potential for a price trend reversal.
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May 23, 2008 at 1:40 pm
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Bulls Power oscillator developed by Alexander Elder & it based on estimation of bulls Power balance since changes in this balance initially signalize about possible trend reversal.
There is always a war between the bears (Pushing prices down) & bulls (Pushing prices up) that depend on the demand& supply in the market & at end of each day there is a result of this war (high or low prices) so during the day it’s very important to be able to estimate the reverse of the line chart.
If trend indicator is down-directed and the Bulls Power index is below zero, but falling, it is a signal to sell.
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May 23, 2008 at 1:23 pm
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Moving averages are one of the most popular, easy & used indicator in technical analysis & also it can be used as an overbought / oversold indicator.
The term “Moving” refers to the method of calculation which takes the average value over a fixed period of time and adds the latest period data to the calculation of the average while dropping the first period of the calculation so that the average continues to be calculated by the same number of periods but moves with each new period of data that occurs.
A 14 day moving average represents the trend in prices over a period of 14 days. A longer 50 day moving average is smoothed more than a 14 day moving average with each new day’s data making less impact on the calculation of the moving average value than a shorter term moving average such as the 14 day moving average.
In Moving average, if price is above the moving average it indicate bullish behavior. While when the prices are below the moving average it is an indication of bearish behavior in relation to the trend length being viewed.
The signal of moving average is to buy when the securities price moves above its moving average and to sell when the price moves below its moving average.
Types of moving averages on the chart:
- Simple Moving Average (SMA)
- Exponential Moving Average (EMA)
- Smoothed Moving Average (SMMA)
- Linear Weighted Moving Average (LWMA)
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