Heiken Ashi chart
• Normal chart is based on OHLC.
• Its COHL.
• HA O=(Open of previous bar+Close of previous bar/2)
• HA H=Highest of high, open or close
• HA L=Lowest of low ,open or close
Common Gap
The gap theory in technical analysis signals a price
movement that has occurred on a stock to a point that is
higher than its highest point on the preceding day.
It happens when no shares change hands and occurs most
often in steady markets; those without trends.
Breakout Gap
A breakaway gap is a term used in technical analysis which
identifies a strong price movement through support or
resistance. A gap is the difference between the open price
and prior close price, where no trading activity takes place.
Runaway Gap
A runaway gap is a significant price movement that occurs
when an asset's price moves away from its previous day's
closing price by a large amount. Technical analysis is a
method of analyzing market data, charts, and other
financial information to make informed investment
decisions. .
Continuation
Continuation
Continuation
Exhaustion Gap
Exhaustion gap refers to a technical indicator used in technical
analysis that occurs when a stock reaches a high price or low price
and then immediately pulls back or reverses course, leaving a gap
between the high price and low price. This gap can indicate a
change in market sentiment or a shift in market direction. It's an
important indicator for traders to be aware of, as it can provide
insight into market trends and potential buying or selling
opportunities.
Trend Reversal
Island Gap
An island gap is a trading pattern that occurs when a stock or
currency moves up to a new high, then pulls back slightly, before
continuing its upward trend. Technical analysis is the study of
market prices and trading patterns using charts and other tools to
make informed decisions about buying and selling assets. By
analyzing these patterns, traders can identify potential
opportunities or risks and make more informed decisions about
their investments.
Alert
Confirmation
1. Leading Indicator
2. Lagging Indicator
3. Hybrid Indicator
1. Leading Indicator
Leading indicators are designed to lead price movement .
Benefits of leading indicators are early signaling for entry and
exit, generating more signals and allow more opportunities to
trade.
Main and popular leading indicators are:
Relative strength Index
Money Flow Index
Commodity Channel Index..etc.
1. Lagging Indicator
Lagging indicators are that indicators that would follow a
trend rather than predicting a reversal.
These indicators work well when price move in relatively long trends. They
don’t warn you of upcoming changes in prices, they simply tell you what
prices are doing (Rsing or falling) so that you can invest accordingly.
These are:
Moving Average
Exponential Moving Average
Volume –weighted average price
MACD is a hybrid Indicator
Difference between Indicator &
Oscillator
An oscillator is an indicator that fluctuates above and below a
centerline or between set levels as its value changes over time.
Oscillators indicators have a scale 0 to 100 or 100 to 0.
Moving Average
The Moving Average formula is calculated by taking the average closing price
of a stock over the last “X” Periods.
Moving Average?
Moving Average are one of the most popular
and easy to use tools available to the
technical analyst. They Smooth a data series
and make it easier to spot trends , something.
That is especially helpful in volatile market.
Use of Moving Average
21 days Moving Average
Trend Identification 50,100 days Moving Average
&
Trade Confirmation Swing & Positional Traders
use 50 & 100 Days Moving Average
Support & Resistance
Level Identification/Confirmation.
Moving Average
Most Popular Average are 9,21,50,100,200.
Short Term Traders use 9 & 21 Days Average.
Swing & Positional Traders use 50 & 100 days Average.
Long Term investors use 200 days moving average.
Moving Average Cross Over
Golden Crossover
Death Crossover
Exponential Moving Average
This gives the Exponential Moving average the advantage
of being quicker to respond to price fluctuations than a
Moving Average.
However, That can also be viewed as a disadvantage
because the EMA is more prone to Whipsaws (i.e false
Signals.
Exponential Moving Average
Calculation of Exponential Moving Average
First, Calculate the moving average.
An exponential moving average (EMA) has to start somewhere so a simple
moving average is used as the previous period’s EMA in the first calculation.
vwap
The Volume-Weighted Average Price (VWAP) is a
technical analysis indicator used on intraday charts that
resets at the start of every new trading session. It
represents the average price a security has traded at
throughout the day, based on both volume and price
1. VWAP is calculated by totaling the dollars traded for
every transaction (price multiplied by the volume)
and then dividing by the total shares traded
2. 1. It is used by traders to confirm trends, value, and
market impact of a security.
Assume a five-minute chart. The calculation is the same regardless of what intraday
time frame is used.
Find the average price the stock traded at over the first five-minute period of the day.
To do this, add the high, low, and close, then divide by three.
Multiply this by the volume for that period. Record the result in a spreadsheet, under
column PV.
Divide PV by the volume for that period. This will produce the VWAP.
To maintain the VWAP throughout the day, continue to add the PV value from each
period to the prior values. Divide this total by total volume up to that point.
vwap
Price Moving Average Based on SMA
C means today’s closing value.
L14 MEANS Lowest VALUE OF PREVIOUS 14TH Candle from today.
H14 MEANS Highest VALUE OF PREVIOUS 14TH Candle from today.
