Technical indicators

Technical Analysis

TECHNICAL INDICATORS




          Presented by: Ashwani Kumar Harit
“Don’t try to buy at the bottom and sell at the top. It can’t be
done except by liars.”



                                      -Bernard Baruch
Technical Indicators: Definition

• Technical indicators are mathematical representations of
  market patterns and behavior

• The indicators are formed by plugging information such
  as price and volume into a mathematical formula.
Why indicators
• Overbought: A technical condition that occurs when there has
  been a lot of buying and the price of the stock is considered
  too high and susceptible to a decline.

 Oversold: A technical condition that occurs when there has
 been a lot of selling and the price of the stock is considered
 too low and a rally in prices is anticipated.
Importance


Essentially traders use technical indicators for two things:

  • To generate buy and sell signals

  • To confirm price movement
Types of Indicators

There are two main types of indicators:

• Leading

• lagging
Leading Indicators
• A leading indicator precedes price movement, and is often
  used to generate buy and sell signals.
• Leading indicators are affected more heavily by recent price
  changes and tend to generate more signals and allow more
  opportunities to trade than lagging indicators.
• Since the indicators produce more buy and sell signals, they
  also produce more false signals.
• When leading indicators are right, they allow you to get into a
  trade early and make more money, but when they're wrong
  you tend to lose money because you're in and out of trades
  more frequently.
Leading Indicators

Some of the more common leading indicators are:


  • Relative Strength Index (RSI)

  • Parabolic SAR

  • Stochastic

  • Williams %R
Lagging Indicators
• A lagging indicator is a confirmation tool because it follows
  price movement.

• It happens "after the fact".

• Change of trend
Lagging Indicators

Two of the more common lagging indicators are:


  • MACD

  • Moving Averages
Other Indicators
• Bollinger Band

• Ichimoku
RSI- Introduction
• Developed by J. Welles Wilder and introduced in his book –
  New Concepts in Technical Trading System
• It is a momentum oscillator that measures the speed and
  change of price movements
• RSI oscillates between zero and 100
• Traditionally, and according to Wilder, RSI is considered
  overbought when above 70 and oversold when below 30
• The default look-back period for RSI is 14, but 9 and 7 are also
  popular
RSI- Introduction
• 80 and 20 can also be used to indicate overbought and
  oversold levels but gives slightly less accurate results than
  70-30
• If the market is trending, then signals in the direction of the
  trend are likely to be more reliable
   • For example if prices are in an up trend, a safer trade entry may be
     obtained by waiting for prices to pullback giving an oversold signal and
     then turn up again
RSI – How to generate buy and sell signals
• If the RSI is above 70 and you are looking for the market to
  form a top, then the RSI crossing back below 70 can be used
  as a sell signal

• The same is true for market bottoms, buying after the RSI has
  moved back above 30

• These signals are best used in non-trending markets
RSI - Bullish and Bearish Divergence
• Divergence between the RSI and the price indicates that an up
  or down move is weakening

• Bearish Divergence occurs when prices are making higher
  highs but the RSI is making lower highs.
  • This is a sign that the up move is weakening

• Bullish Divergence occurs when prices are making lower lows
  but the RSI is making higher lows
  • This is a sign that the down move is weakening
RSI – Divergence Confirmation
• RSI is an indicator not the confirmation

• It is important to note that although Divergences indicate a
  weakening trend they do not in themselves indicate that the
  trend has reversed

• The confirmation or signal that the trend has reversed must
  come from price action, for example a trend line break
RSI
RSI- Divergence
RSI- Trade Confirmation
Contd…
Parabolic SAR
Parabolic SAR - Introduction
• Parabolic Time Price is a system that always has a position in
  the market, either long or short
• One can close out the current position and enter a reverse
  position when the price crosses the current Stop And Reverse
  (SAR) point
• The SAR points resemble a parabolic curve as they begin to
  tighten and close in on prices once prices begin to trend
• Parabolic Time Price is usually charted with a bar analysis so
  that the stop and reverse points are easily identified
Parabolic SAR - Depiction

• If you are long, the SAR points will be below the prices and the

  signal to go short will be when prices cross the current SAR

  point from above
Technical indicators
Parabolic SAR - Depiction

• If you are short, the SAR points will be above the prices and

  the signal to go long will be when prices cross the current SAR

  point from below
Technical indicators
Ues of Parabolic
• Signals to stop out of the current position and enter a reverse

  position are when prices cross the current SAR point

• For example if the SAR points are below prices you would be

  long with an order to close out the current long position and

  enter a short position at that period’s SAR point
Entry and Exit Technique

• One would take only long trades when the trend is up and
  only short trades when the trend is down
Where to place a stop loss

• After a trade has been entered using another method or

 technique, the SAR points of Parabolic Time Price are used to

 trail a stop on the position
Stop Loss by using SAR
Stochastic

•Fast Stochastic

•Slow Stochastic
Stochastic
• Stochastics are oscillators developed by George Lane
• Are based on the following observation
  • As prices increase - closing prices tend to be closer to the upper
    end of the price range
  • As prices decrease - closing prices tend to be closer to the lower
    end of the price range
Stochastic
• Stochastic consist of two lines, %K and %D
• The %K line measures, as a percentage, where the current
  close is, in relation to the lowest low over the observation
  period.
  • This is shown on a scale of 0 to 100, where 0 is the observation
    period low, and 100 is the observation period high.
• The %D line is a Simple Moving Average of the %K
Stochastic
• Slow Stochastics are the more commonly used of the two
  Stochastic types
• Slow Stochastics are based on Fast Stochastics but provide a
  slower, smoother response to price movements
• Slow Stochastics are smoother and are less likely to give false
  signals
Uses of Stochastics
• Indicate overbought and oversold conditions
• An overbought or oversold market is one where the prices have
  risen or fallen too far and are therefore likely to retrace. If the %D
  line is above 80% then the close is near the top end of the range of
  the observation period, while a reading below 20% means that the
  close is near the bottom end of the range of the observation period.
• Generally the area above 80 is considered overbought, while the
  area below 20 is oversold. The specified overbought/oversold
  ranges vary. Other commonly used ranges include 75-25, 70-30 and
  85-15.
• Overbought and oversold signals are most reliable in a non-trending
  market where prices are making a series of equal highs and lows. If
  the market is trending, then signals in the direction of the trend are
  likely to be more reliable.
Stochastic: Overbought and Oversold
Stochastic: Overbought and Oversold
Stochastic: Generate buy and sell signals
• For a buy or sell signal the following conditions must be met in
  order
  • The %K and %D lines move above 80 or below 20

  • The %K and %D lines cross
•   Bearish Divergence occurs when prices are making higher highs but the
    Stochastics are making lower highs. This is a sign that the up move is weakening.
•   Bullish Divergence occurs when prices are making lower lows but the
    Stochastics are making higher lows. This is a sign that the down move is
    weakening
Stochastic: Negative Divergence
Wiliams % R
• Developed by Larry Williams

• Williams %R is a momentum indicator that works much like
  the Stochastic Oscillator

• It is especially popular for measuring overbought and oversold
  levels

• Shows the relationship of the close relative to the high-low
  range over a set period of time
Wiliams % R: Scale
• The scale ranges from 0 to -100

• Readings from 0 to -20 considered overbought

• Readings from -80 to -100 considered oversold

• The nearer the close is to the top of the range, the nearer to
  zero (higher) the indicator will be

• The nearer the close is to the bottom of the range, the nearer
  to -100 (lower) the indicator will be
Wiliams % R: Uses
• Identify the underlying trend and then look for trading
  opportunities in the direction of the trend

• In an up trend, traders may look to oversold readings to
  establish long positions

• In a downtrend, traders may look to overbought readings to
  establish short positions
Technical indicators
Divergence
Lagging Indicators

 • MACD

 • Moving Averages
MACD: Moving Average Convergence Divergence
• Developed by Gerald Appel

• 26 and 12-week cycles in the stock market

• MACD is a type of oscillator that can measure market
  momentum as well as follow or indicate the new trend
What is MACD
• MACD consists of two lines
  • MACD Line
  • Signal Line
• The MACD Line measures the difference between a short
  Moving Average and a long Moving Average
• The Signal Line is a Moving Average of the MACD Line
• MACD oscillates above and below a zero line without upper
  and lower boundaries
MACD: Use
• To Generate buy and sell signals
• Signals are generated when the MACD Line and the Signal Line
  cross
• A buy signal occurs when the MACD Line crosses from below
  to above the Signal Line, the further below the zero line that
  this occurs the stronger the signal
• A sell signal occurs when the MACD Line crosses from above
  to below the Signal Line, the further above the zero line that
  this occurs the stronger the signal
Buy/Sell signals using MACD
Indicating trend direction with MACD
• If a trend is gaining momentum then the difference between
  the short and long moving average will increase
• This means that if both MACD lines are above (below) zero
  and the MACD Line is above (below) the Signal Line, then the
  trend is up (down)
Divergence with MACD
• Divergence between the MACD and the price indicates that an
 up or down move is weakening

• Bearish Divergence occurs when prices are making higher
 highs but the MACD is making lower highs. This is a sign that
 the up move is weakening

• Bullish Divergence occurs when prices are making lower lows
 but the MACD is making higher lows. This is a sign that the
 down move is weakening
Negative Divergence with MACD
Parameters for MACD
• Short averaging period: (default 12)
• Long averaging period: (default 26)
• Signal line averaging period: (default 9)



• You may wish to change the parameters to match another
  cycle period you have observed
OTHER INDICATORS
• Bollinger Band

• Ichimoku
BOLLINGER BAND
• Developed by John Bollinger, Bollinger Bands

• charted by calculating a simple moving average of price,
  then creating two bands a specified number of standard
  deviations above and below the moving average

• Generally +/- 2 standard deviation

• Bollinger Bands gives best results with a bar chart, so that the
  proximity of the bands to the prices can be easily observed
BOLLINGER BAND: Use
• Identify overbought and oversold markets
• An overbought or oversold market is one where the prices
  have risen or fallen too far and are therefore likely to retrace
• Prices near the lower band signal an oversold market and
  prices near the upper band signal an overbought market
• Overbought and oversold signals are most reliable in a non-
  trending market where prices are making a series of equal
  highs and lows
Overbought/Oversold
Signal in a trendy market
• If the market is trending, then signals in the direction of the
  trend are likely to be more reliable

• For example if prices are in an up trend, a safer trade entry
  may be obtained by waiting for prices to pullback giving an
  oversold signal and then turn up again
A typical Bollinger Band
Used in combination with an oscillator to generate
buy or sell signals

• If we use Bollinger Bands in combination with an oscillator
  such as Relative Strength Index (RSI), buy and sell signals
  are generated when      the Bollinger   Bands signal an
  overbought/oversold market at the same time the oscillator
  signals a divergence
Negative Divergence with Bollinger Band
The bands often narrow just before a sharp price move. A period of low
volatility often precedes a sharp move in prices; low volatility will cause the
bands to narrow
Signal potential tops and bottoms


• A top that breaks above the upper band followed by another
 that is between the bands signals a potential top in the market

• A bottom that breaks below the lower band followed by
 another that is between the bands signals a potential bottom
Signals
Parameters for Bollinger Band
• The length of the moving average is usually 20 days or less i.e.
  a simple moving average in the middle of the Bollinger band

• Bollinger used a figure of 2 standard deviations in his work,
  which was in stock trading
Signals
ICHIMOKU
Introduction
• The Ichimoku Kinko Hyo Japanese charting technique was
  developed before World War II with the aim of portraying - in
  a snapshot - where the price was heading and when was the
  right time to enter or exit t
• The word Ichimoku can be translated to mean "a glance" or
  "one look". Kinko translates into "equilibrium" or "balance",
  with respect to price and time, and Hyo is the Japanese word
  for "chart". Thus, Ichimoku Kinko Hyo simply means "a glance
  at an equilibrium chart"
• Invented by a Japanese journalist with a pen name of
  "Ichimoku Sanjin", meaning "a glance of a mountain man“
The Chart
Calculation
• The Ichimoku chart consists of five lines
• Tenkan-Sen = Conversion Line = (Highest High + Lowest Low) /
  2, for the past 9 periods
• Kijun-Sen = Base Line = (Highest High + Lowest Low) / 2, for
  the past 26 periods
• Chikou Span = Lagging Span = Today's closing price plotted 26
  periods behind
• Senkou Span A = Leading Span A = (Tenkan-Sen + Kijun-Sen) /
  2, plotted 26 periods ahead
• Senkou Span B = Leading Span B = (Highest High + Lowest
  Low) / 2, for the past 52 periods, plotted 26 periods ahead
• Kumo = Cloud = Area between Senkou Span A and B
Signals
• Ichimoku uses three key time periods for its input parameters:
  9, 26, and 52.
• A bullish signal is issued when the Tenkan-Sen (orange line)
  crosses the Kijun-Sen (purple line) from below
• A bearish signal is issued when the Tenkan-Sen crosses the
  Kijun-Sen from above.
• If there was a bullish crossover signal and the price, at that
  time, was trading above the Kumo (or cloud), this would be
  considered a very strong buy signal
Feature
• Another striking feature of the Ichimoku charting technique is
  the identification of support and resistance levels
• These levels can be predicted by the presence of the Kumo
• The Kumo can also be used to help identify the prevailing
  trend of the market
• If the price is above the Kumo, the prevailing trend is said to
  be up
• And if the price is below the Kumo, the prevailing trend is said
  to be down.
Support Level
Resistance Level
Buy/Sell Signals
Buy/Sell Signals
Buy/Sell Signals
PIVOTS
HAPPY TRADING



          ASHWANI KUMAR HARIT
                     9818688537
        Ashwani_harit@yahoo.com
          kumashwani@gmail.com
1 sur 80

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Technical indicators

  • 1. Technical Analysis TECHNICAL INDICATORS Presented by: Ashwani Kumar Harit
  • 2. “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” -Bernard Baruch
  • 3. Technical Indicators: Definition • Technical indicators are mathematical representations of market patterns and behavior • The indicators are formed by plugging information such as price and volume into a mathematical formula.
  • 4. Why indicators • Overbought: A technical condition that occurs when there has been a lot of buying and the price of the stock is considered too high and susceptible to a decline. Oversold: A technical condition that occurs when there has been a lot of selling and the price of the stock is considered too low and a rally in prices is anticipated.
  • 5. Importance Essentially traders use technical indicators for two things: • To generate buy and sell signals • To confirm price movement
  • 6. Types of Indicators There are two main types of indicators: • Leading • lagging
  • 7. Leading Indicators • A leading indicator precedes price movement, and is often used to generate buy and sell signals. • Leading indicators are affected more heavily by recent price changes and tend to generate more signals and allow more opportunities to trade than lagging indicators. • Since the indicators produce more buy and sell signals, they also produce more false signals. • When leading indicators are right, they allow you to get into a trade early and make more money, but when they're wrong you tend to lose money because you're in and out of trades more frequently.
  • 8. Leading Indicators Some of the more common leading indicators are: • Relative Strength Index (RSI) • Parabolic SAR • Stochastic • Williams %R
  • 9. Lagging Indicators • A lagging indicator is a confirmation tool because it follows price movement. • It happens "after the fact". • Change of trend
  • 10. Lagging Indicators Two of the more common lagging indicators are: • MACD • Moving Averages
  • 11. Other Indicators • Bollinger Band • Ichimoku
  • 12. RSI- Introduction • Developed by J. Welles Wilder and introduced in his book – New Concepts in Technical Trading System • It is a momentum oscillator that measures the speed and change of price movements • RSI oscillates between zero and 100 • Traditionally, and according to Wilder, RSI is considered overbought when above 70 and oversold when below 30 • The default look-back period for RSI is 14, but 9 and 7 are also popular
  • 13. RSI- Introduction • 80 and 20 can also be used to indicate overbought and oversold levels but gives slightly less accurate results than 70-30 • If the market is trending, then signals in the direction of the trend are likely to be more reliable • For example if prices are in an up trend, a safer trade entry may be obtained by waiting for prices to pullback giving an oversold signal and then turn up again
  • 14. RSI – How to generate buy and sell signals • If the RSI is above 70 and you are looking for the market to form a top, then the RSI crossing back below 70 can be used as a sell signal • The same is true for market bottoms, buying after the RSI has moved back above 30 • These signals are best used in non-trending markets
  • 15. RSI - Bullish and Bearish Divergence • Divergence between the RSI and the price indicates that an up or down move is weakening • Bearish Divergence occurs when prices are making higher highs but the RSI is making lower highs. • This is a sign that the up move is weakening • Bullish Divergence occurs when prices are making lower lows but the RSI is making higher lows • This is a sign that the down move is weakening
  • 16. RSI – Divergence Confirmation • RSI is an indicator not the confirmation • It is important to note that although Divergences indicate a weakening trend they do not in themselves indicate that the trend has reversed • The confirmation or signal that the trend has reversed must come from price action, for example a trend line break
  • 17. RSI
  • 22. Parabolic SAR - Introduction • Parabolic Time Price is a system that always has a position in the market, either long or short • One can close out the current position and enter a reverse position when the price crosses the current Stop And Reverse (SAR) point • The SAR points resemble a parabolic curve as they begin to tighten and close in on prices once prices begin to trend • Parabolic Time Price is usually charted with a bar analysis so that the stop and reverse points are easily identified
  • 23. Parabolic SAR - Depiction • If you are long, the SAR points will be below the prices and the signal to go short will be when prices cross the current SAR point from above
  • 25. Parabolic SAR - Depiction • If you are short, the SAR points will be above the prices and the signal to go long will be when prices cross the current SAR point from below
  • 27. Ues of Parabolic • Signals to stop out of the current position and enter a reverse position are when prices cross the current SAR point • For example if the SAR points are below prices you would be long with an order to close out the current long position and enter a short position at that period’s SAR point
  • 28. Entry and Exit Technique • One would take only long trades when the trend is up and only short trades when the trend is down
  • 29. Where to place a stop loss • After a trade has been entered using another method or technique, the SAR points of Parabolic Time Price are used to trail a stop on the position
  • 30. Stop Loss by using SAR
  • 32. Stochastic • Stochastics are oscillators developed by George Lane • Are based on the following observation • As prices increase - closing prices tend to be closer to the upper end of the price range • As prices decrease - closing prices tend to be closer to the lower end of the price range
  • 33. Stochastic • Stochastic consist of two lines, %K and %D • The %K line measures, as a percentage, where the current close is, in relation to the lowest low over the observation period. • This is shown on a scale of 0 to 100, where 0 is the observation period low, and 100 is the observation period high. • The %D line is a Simple Moving Average of the %K
  • 34. Stochastic • Slow Stochastics are the more commonly used of the two Stochastic types • Slow Stochastics are based on Fast Stochastics but provide a slower, smoother response to price movements • Slow Stochastics are smoother and are less likely to give false signals
  • 35. Uses of Stochastics • Indicate overbought and oversold conditions • An overbought or oversold market is one where the prices have risen or fallen too far and are therefore likely to retrace. If the %D line is above 80% then the close is near the top end of the range of the observation period, while a reading below 20% means that the close is near the bottom end of the range of the observation period. • Generally the area above 80 is considered overbought, while the area below 20 is oversold. The specified overbought/oversold ranges vary. Other commonly used ranges include 75-25, 70-30 and 85-15. • Overbought and oversold signals are most reliable in a non-trending market where prices are making a series of equal highs and lows. If the market is trending, then signals in the direction of the trend are likely to be more reliable.
  • 38. Stochastic: Generate buy and sell signals • For a buy or sell signal the following conditions must be met in order • The %K and %D lines move above 80 or below 20 • The %K and %D lines cross
  • 39. Bearish Divergence occurs when prices are making higher highs but the Stochastics are making lower highs. This is a sign that the up move is weakening. • Bullish Divergence occurs when prices are making lower lows but the Stochastics are making higher lows. This is a sign that the down move is weakening
  • 41. Wiliams % R • Developed by Larry Williams • Williams %R is a momentum indicator that works much like the Stochastic Oscillator • It is especially popular for measuring overbought and oversold levels • Shows the relationship of the close relative to the high-low range over a set period of time
  • 42. Wiliams % R: Scale • The scale ranges from 0 to -100 • Readings from 0 to -20 considered overbought • Readings from -80 to -100 considered oversold • The nearer the close is to the top of the range, the nearer to zero (higher) the indicator will be • The nearer the close is to the bottom of the range, the nearer to -100 (lower) the indicator will be
  • 43. Wiliams % R: Uses • Identify the underlying trend and then look for trading opportunities in the direction of the trend • In an up trend, traders may look to oversold readings to establish long positions • In a downtrend, traders may look to overbought readings to establish short positions
  • 46. Lagging Indicators • MACD • Moving Averages
  • 47. MACD: Moving Average Convergence Divergence • Developed by Gerald Appel • 26 and 12-week cycles in the stock market • MACD is a type of oscillator that can measure market momentum as well as follow or indicate the new trend
  • 48. What is MACD • MACD consists of two lines • MACD Line • Signal Line • The MACD Line measures the difference between a short Moving Average and a long Moving Average • The Signal Line is a Moving Average of the MACD Line • MACD oscillates above and below a zero line without upper and lower boundaries
  • 49. MACD: Use • To Generate buy and sell signals • Signals are generated when the MACD Line and the Signal Line cross • A buy signal occurs when the MACD Line crosses from below to above the Signal Line, the further below the zero line that this occurs the stronger the signal • A sell signal occurs when the MACD Line crosses from above to below the Signal Line, the further above the zero line that this occurs the stronger the signal
  • 51. Indicating trend direction with MACD • If a trend is gaining momentum then the difference between the short and long moving average will increase • This means that if both MACD lines are above (below) zero and the MACD Line is above (below) the Signal Line, then the trend is up (down)
  • 52. Divergence with MACD • Divergence between the MACD and the price indicates that an up or down move is weakening • Bearish Divergence occurs when prices are making higher highs but the MACD is making lower highs. This is a sign that the up move is weakening • Bullish Divergence occurs when prices are making lower lows but the MACD is making higher lows. This is a sign that the down move is weakening
  • 54. Parameters for MACD • Short averaging period: (default 12) • Long averaging period: (default 26) • Signal line averaging period: (default 9) • You may wish to change the parameters to match another cycle period you have observed
  • 55. OTHER INDICATORS • Bollinger Band • Ichimoku
  • 56. BOLLINGER BAND • Developed by John Bollinger, Bollinger Bands • charted by calculating a simple moving average of price, then creating two bands a specified number of standard deviations above and below the moving average • Generally +/- 2 standard deviation • Bollinger Bands gives best results with a bar chart, so that the proximity of the bands to the prices can be easily observed
  • 57. BOLLINGER BAND: Use • Identify overbought and oversold markets • An overbought or oversold market is one where the prices have risen or fallen too far and are therefore likely to retrace • Prices near the lower band signal an oversold market and prices near the upper band signal an overbought market • Overbought and oversold signals are most reliable in a non- trending market where prices are making a series of equal highs and lows
  • 59. Signal in a trendy market • If the market is trending, then signals in the direction of the trend are likely to be more reliable • For example if prices are in an up trend, a safer trade entry may be obtained by waiting for prices to pullback giving an oversold signal and then turn up again
  • 61. Used in combination with an oscillator to generate buy or sell signals • If we use Bollinger Bands in combination with an oscillator such as Relative Strength Index (RSI), buy and sell signals are generated when the Bollinger Bands signal an overbought/oversold market at the same time the oscillator signals a divergence
  • 62. Negative Divergence with Bollinger Band
  • 63. The bands often narrow just before a sharp price move. A period of low volatility often precedes a sharp move in prices; low volatility will cause the bands to narrow
  • 64. Signal potential tops and bottoms • A top that breaks above the upper band followed by another that is between the bands signals a potential top in the market • A bottom that breaks below the lower band followed by another that is between the bands signals a potential bottom
  • 66. Parameters for Bollinger Band • The length of the moving average is usually 20 days or less i.e. a simple moving average in the middle of the Bollinger band • Bollinger used a figure of 2 standard deviations in his work, which was in stock trading
  • 69. Introduction • The Ichimoku Kinko Hyo Japanese charting technique was developed before World War II with the aim of portraying - in a snapshot - where the price was heading and when was the right time to enter or exit t • The word Ichimoku can be translated to mean "a glance" or "one look". Kinko translates into "equilibrium" or "balance", with respect to price and time, and Hyo is the Japanese word for "chart". Thus, Ichimoku Kinko Hyo simply means "a glance at an equilibrium chart" • Invented by a Japanese journalist with a pen name of "Ichimoku Sanjin", meaning "a glance of a mountain man“
  • 71. Calculation • The Ichimoku chart consists of five lines • Tenkan-Sen = Conversion Line = (Highest High + Lowest Low) / 2, for the past 9 periods • Kijun-Sen = Base Line = (Highest High + Lowest Low) / 2, for the past 26 periods • Chikou Span = Lagging Span = Today's closing price plotted 26 periods behind • Senkou Span A = Leading Span A = (Tenkan-Sen + Kijun-Sen) / 2, plotted 26 periods ahead • Senkou Span B = Leading Span B = (Highest High + Lowest Low) / 2, for the past 52 periods, plotted 26 periods ahead • Kumo = Cloud = Area between Senkou Span A and B
  • 72. Signals • Ichimoku uses three key time periods for its input parameters: 9, 26, and 52. • A bullish signal is issued when the Tenkan-Sen (orange line) crosses the Kijun-Sen (purple line) from below • A bearish signal is issued when the Tenkan-Sen crosses the Kijun-Sen from above. • If there was a bullish crossover signal and the price, at that time, was trading above the Kumo (or cloud), this would be considered a very strong buy signal
  • 73. Feature • Another striking feature of the Ichimoku charting technique is the identification of support and resistance levels • These levels can be predicted by the presence of the Kumo • The Kumo can also be used to help identify the prevailing trend of the market • If the price is above the Kumo, the prevailing trend is said to be up • And if the price is below the Kumo, the prevailing trend is said to be down.
  • 80. HAPPY TRADING ASHWANI KUMAR HARIT 9818688537 Ashwani_harit@yahoo.com kumashwani@gmail.com