General picture

技术分析：
Based on the past market data including prices and volumes to analyze or predict the direction of prices.

Technical indicators(技术指标)

Trend indicator

  • Simple Moving Average(SMA):
    1. principle:
      calculate the average history data and can adjust the duration of history to determine the trend duration
    2. trading strategy:
      Bullish(看涨): when a more sensitive SMA crosses less sensitive SMA from below -> the current market favor
      Bearlish(看跌): when a more sensitive SMA crosses less sensitive SMA from above
  • Exponential Moving Average(EMA):
    1. principle:
      Based on the data of SMA, calculate the different weights of different history periods.
    2. Characteristic:
      It can help smooth out price data over a certain period of time and minimize the impact of random price spikes.
      It is more sensitive to more current prices by stressing their weights.
  • Moving Average Convergence /Divergence(MACD):
    1. sum: momentum oscillator primarily used to trade trends
    2. construction:
      MACD line: 12-period EMA - 26-period EMA
      Signal line: 9-period EMA of the MACD line
    3. working principles:
      Notice: it assumes that the price should retain the previous history values
      It can help the analysts to gain insights into the market trend
      When MACD crossing above the zero line -> bullish
      When MACD crossing below the zero line -> bearish
  • Average Directional Movement Index(ADX)*
    1. sum: measure the overall strength of a trend, itself can’t tell the direction of the trend
    2. constructions:
      • Directional Movement(DM): compare the current period price range with the previous period price range.
        H_c + L_c > H_p + L_p -> PDI exist
      • TR = max{current high - current low; current high - previous low; current low -previous low}
    3. Interpretations:
      • Values range form 0 to 100, and ADX > 25: strong trend, ADX < 20: weak trend or trading average environment
      • ADX rising -> The trend is getting stronger

Momentum Indicators

  • Overbought and Oversold in Oscillators
    1. definition of oscillator
      Indicators which are bounded
    2. Overbought: the oscillator reaches a zero close to upper bound
    3. Oversold: the oscillator reaches a zero close to lower bound
    4. Strategy:
      If the oscillator reaches either bound -> the market is vulnerable to reversal(which may indicate the trend change)
      However, if the trend of the market is changing, the prediction of oscillator will fail -> It is dependent on the underlying trend
      即通过历史高位与低位来判断当下某些资产的价格趋势
  • Stochastic Oscillator(随机指标):*
    1. Geberal ideas: When the market favors, the close price tends to approach the upper bound of a period price; When the market disfavors, the close price tends to approach the lower bound of a period price
    2. It compares a particular closing price of an asset to a range of its prices over a certain period
    3. Interpretations:
      A sell signal is given when the oscillator is above the 80 level and then crosses back below 80. Conversely, a buy signal is given when the oscillator is below 20 and then crosses back above 20
  • Relative Strength Index:
    1. Sum: measures the speed and change of price movements
    2. Interpretations:
      The RSI oscillates from zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

Volume Indicators

  • General Rules:
    1. Increasing volume reinforces the trend directions
    2. Declining volume diminishes the trend directions
    3. A price peak or trough(谷) on ultrahigh volume is often an important reversal point in a trend
    4. Volume indicators should be considered warnings but not signals of change in trend directions
  • On Balance Volume(OBV):
    1. Descriptions:
      measures buying and selling pressure as cumulative indicator
    2. Calculation:
      Volumes(up days) - Volumes(down days)
    3. Interpretations:
      The volumes are often seen as indicators of market expectations. So when OBV is rising -> bullish trend and when OBV is decreasing -> price down
      Divergence: If the price is up but the OBV is decreasing - > may indicate a reversal
  • Money Flow Index:
    1. Components
      Typical Price(TP): average of high, low and close price
      Raw Money Flow(RMF):TP /* Volume
      Money Flow Ratio(MFR): calculate by sum the positive RMF and negative RMF
    2. Interpretations:
      Overbought/Oversold: An MFI of over 80 suggests that the security is overbought and could be primed for a price decline. Conversely, an MFI under 20 suggests the security may be oversold and potentially ready to bounce back.
  • Accumulation/Distribution:
    1. definition:
      accumulation: People are actively buying a security over a period
      distribution: Sellers are controlling the market and the stock price is likely to be under pressure or decreasing
    2. calculations:
      $$Multiplier = \frac{2*Close-Low-High}{High-Low}$$$$Money Flow Volume = Multiplier * Volume$$$$Line = Previous A/D \ Line + MoneyFlowVolume$$
    3. Interpretations:
      When both price and Accumulation/Distribution are making higher peaks and higher troughs, the uptrend is likely to continue.
      When both price and Accumulation/Distribution are making lower peaks and lower troughs, the downtrend is likely to continue

Volatility Indicators

  • Bollinger Bands:
    1. Descriptions:
      A type of price envelope plotted at a standard deviation level above an dbelow a simple moving Average
    2. It can indicate the volatility that help predicts likelihood of a sharp price move in either direction
  • Average True Range

Support and resistance indicators