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    Technical Indicators Working

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    Saurabh Mane
    The document discusses various technical indicators used to analyze trends in financial markets. It provides details on the Average Directional Index (ADX) indicator, explaining that it measures trend strength on a scale of 0-100. ADX values above 25 indicate a strong trend, while values below 25 suggest a market with no clear trend. The document also notes that falling ADX values mean the trend is weakening but not necessarily reversing. In addition to ADX, it briefly mentions several other common technical indicators like Bollinger Bands, MACD, and RSI.

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    Technical Indicators Working

    Uploaded by

    Saurabh Mane
    127 views10 pages
    The document discusses various technical indicators used to analyze trends in financial markets. It provides details on the Average Directional Index (ADX) indicator, explaining that it measures trend strength on a scale of 0-100. ADX values above 25 indicate a strong trend, while values below 25 suggest a market with no clear trend. The document also notes that falling ADX values mean the trend is weakening but not necessarily reversing. In addition to ADX, it briefly mentions several other common technical indicators like Bollinger Bands, MACD, and RSI.

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    The document discusses various technical indicators used to analyze trends in financial markets. It provides details on the Average Directional Index (ADX) indicator, explaining that it measures trend strength on a scale of 0-100. ADX values above 25 indicate a strong trend, while values below 25 suggest a market with no clear trend. The document also notes that falling ADX values mean the trend is weakening but not necessarily reversing. In addition to ADX, it briefly mentions several other common technical indicators like Bollinger Bands, MACD, and RSI.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    127 views10 pages

    Technical Indicators Working

    Uploaded by

    Saurabh Mane
    The document discusses various technical indicators used to analyze trends in financial markets. It provides details on the Average Directional Index (ADX) indicator, explaining that it measures trend strength on a scale of 0-100. ADX values above 25 indicate a strong trend, while values below 25 suggest a market with no clear trend. The document also notes that falling ADX values mean the trend is weakening but not necessarily reversing. In addition to ADX, it briefly mentions several other common technical indicators like Bollinger Bands, MACD, and RSI.

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    © All Rights Reserved
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    of 10

    Technical Indicators working

    1) ADX :- ADX is used to quantify trend strength. ADX calculations are based on a moving
    average of price range expansion over a given period of time. When the +DMI is above the
    -DMI, prices are moving up, and ADX measures the strength of the uptrend. When the -DMI is
    above the +DMI, prices are moving down, and ADX measures the strength of the downtrend.
    Many traders will use ADX readings above 25 to suggest that the trend's strength is strong
    enough for trend trading strategies. Conversely, when ADX is below 25, many will avoid trend
    trading strategies.
    ADX
    Value

    Trend Strength

    0-25

    Absent or Weak Trend

    25-50

    Strong Trend

    50-75

    Very Strong Trend

    75-100

    Extremely Strong Trend

    Low ADX is a usually a sign of accumulation or distribution. When ADX is below 25 for
    more than 30 bars, price enters range conditions and price patterns are often easier to identify.
    Price then moves up and down between resistance and support to find selling and buying interest,

    respectively. From low ADX conditions, price will eventually break out into a trend. In Figure 3,
    price moves from a low ADX price channel to an uptrend with strong ADX.
    A common misperception is that a falling ADX line means the trend is reversing. A
    falling ADX line only means the trend strength is weakening, but it usually does not mean the
    trend is reversing
    unless there has been
    a price climax. As
    long as ADX is above
    25, it is best to think
    of a falling ADX line
    as simply less strong
    (Figure 5).

    Trend Momentum
    The series of ADX peaks are also a visual representation of overall trend momentum.

    ADX clearly indicates when the trend is gaining or losing momentum. Momentum is the velocity
    of price. A series of higher ADX peaks means trend momentum is increasing. A series of lower
    ADX peaks means trend momentum is decreasing.
    Figure 7: Price makes a higher high while ADX makes a lower high. In this case, the negative
    divergence lead to a trend reversal.
    Conclusion: Finding Friendly Trends
    The best profits come from trading the strongest trends and avoiding range conditions.
    ADX not only identifies trending conditions, it helps the trader find the strongest trends to trade.
    The ability to quantify trend strength is a major edge for traders.

    ADX also identifies range conditions, so a trader won't get stuck trying to trend trade in
    sideways price action. In addition, it shows when price has broken out of a range with sufficient
    strength to use trend trading strategies. ADX also alerts the trader to changes in trend

    momentum, so risk management can be addressed. If you want the trend to be your friend, you'd
    better not let ADX become a stranger.
    2) Bollinger Band :- Lower band acts as support and upper band as resistance.
    3) Commodity Channel Index:-

    4) Displace MT Movie AVg:- Slower than ADX

    5) Displaced Moving Avg:- Used along with ADX to identify side trend

    6) MACD :- MACD is faster than ADX. ADX confirms trends. MACD gives early buy and

    sell signals. MACD eliminates side trend.


    7) Money Flow Index :-

    8) Momentum :9) MA 20 50 DAYS :10) PARABOLIC SAR :- Gives Early Sign

    11) Rate of change :-

    12)

    RSI :13) Stochcastic :-

    14)

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