Technical Analysis
- Standard Oscillators
1NSFX Trading Desk
Agenda
• What are oscillators?
• Relative Strength Index (RSI)
• Moving Average Convergence/Divergence
(MACD)
• Stochastic...
What are oscillators?
• A mathematical tool to assess market moves
• Compared to Moving Averages and other indicators,
whi...
Relative Strength Index (RSI)
• Developed by Welles Wilder and first published in 1978
• The RSI is a momentum indicator w...
Relative Strength Index (RSI)
1. Oversold – market corrects higher
5NSFX Trading Desk
Relative Strength Index (RSI)
1. Oversold – market corrects higher
2. Overbought – market corrects lower
6NSFX Trading Desk
Relative Strength Index (RSI)
1. Oversold – market corrects higher
2. Overbought – market corrects lower
3. Divergence – p...
MACD
• Developed in late 1970s by Gerald Appel
• Built on several exponential moving averages and applied for both trend-
...
MACD
Signal Line
MACD Line
MACD Histogram (MACD Line – Signal Line) 9NSFX Trading Desk
MACD
1. Line crossovers
10NSFX Trading Desk
MACD
1. Line crossovers
2. Bullish Divergence (convergence)
11NSFX Trading Desk
Stochastic Slow
• Developed in the late 1950s by George C. Lane
• Shows location of the close relative to a high-low range...
Stochastic Slow
%K
%D
13NSFX Trading Desk
Stochastic Slow
1. Overbought/Oversold
14NSFX Trading Desk
Stochastic Slow
1. Overbought/Oversold
2. Crossovers
15NSFX Trading Desk
Stochastic Slow
1. Overbought/Oversold
2. Crossovers
3. Convergence/Divergence
16NSFX Trading Desk
Example - MACD, RSI & STOCHS
Combined on the S&P Daily
17NSFX Trading Desk
Upcoming SlideShare
Loading in...5
×

Technical Analysis: Oscillators by NSFX

575

Published on

Oscillators Technical Analysis by NSFX Ltd.

Published in: Economy & Finance, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
575
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
74
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Technical Analysis: Oscillators by NSFX

  1. 1. Technical Analysis - Standard Oscillators 1NSFX Trading Desk
  2. 2. Agenda • What are oscillators? • Relative Strength Index (RSI) • Moving Average Convergence/Divergence (MACD) • Stochastics 2NSFX Trading Desk
  3. 3. What are oscillators? • A mathematical tool to assess market moves • Compared to Moving Averages and other indicators, which are applied on the chart, the oscillators are separate and give an index to measure market conditions from an overbought/oversold, divergence/convergence perspective • Good for identifying potential reversals and have historically proven most successful when markets are trading sideways, without a clear trend. 3NSFX Trading Desk
  4. 4. Relative Strength Index (RSI) • Developed by Welles Wilder and first published in 1978 • The RSI is a momentum indicator which compares the average price change of the advancing periods with the average change of the declining periods. • Useful in both short and long term analysis, but standard criteria are set different • Standard formula: 𝑅𝑆𝐼 = 100 − 100 1+𝑅𝑆 , 𝑤ℎ𝑒𝑟𝑒 𝑅𝑆 = 𝐴𝑣𝑔 𝑜𝑓 𝑛 𝑝𝑒𝑟𝑖𝑜𝑑𝑠′ 𝑢𝑝 𝑐𝑙𝑜𝑠𝑒𝑠 𝐴𝑣𝑔 𝑜𝑓 𝑛 𝑝𝑒𝑟𝑖𝑜𝑑𝑠′ 𝑑𝑜𝑤𝑛 𝑐𝑙𝑜𝑠𝑒𝑠 This will give us an index ranging from 0-100, making it possible to assess possible divergence or if an instrument is oversold/overbought 4NSFX Trading Desk
  5. 5. Relative Strength Index (RSI) 1. Oversold – market corrects higher 5NSFX Trading Desk
  6. 6. Relative Strength Index (RSI) 1. Oversold – market corrects higher 2. Overbought – market corrects lower 6NSFX Trading Desk
  7. 7. Relative Strength Index (RSI) 1. Oversold – market corrects higher 2. Overbought – market corrects lower 3. Divergence – price moves opposite of indicator 7NSFX Trading Desk
  8. 8. MACD • Developed in late 1970s by Gerald Appel • Built on several exponential moving averages and applied for both trend- following and gauging of momentum. • Compared to the RSI, the MACD fluctuates around zero, not indexed and is not as useful as the RSI as identifying overbought/oversold levels. • Consisting of a so-called MACD-line and a signal line (and a histogram showing the difference between the two): Standard Parameters: MACD-line: (12-day EMA – 26-day EMA) Signal Line: 9-day EMA of MACD Line MACD Histogram: MACD Line – Signal Line 8NSFX Trading Desk
  9. 9. MACD Signal Line MACD Line MACD Histogram (MACD Line – Signal Line) 9NSFX Trading Desk
  10. 10. MACD 1. Line crossovers 10NSFX Trading Desk
  11. 11. MACD 1. Line crossovers 2. Bullish Divergence (convergence) 11NSFX Trading Desk
  12. 12. Stochastic Slow • Developed in the late 1950s by George C. Lane • Shows location of the close relative to a high-low range over an interval and follows the momentum of the price action. • Good for finding reversal setups as well as overbought/oversold situations. Formula: %𝐾 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐶𝑙𝑜𝑠𝑒 −𝐿𝑜𝑤𝑒𝑠𝑡 𝐿𝑜𝑤(𝑛) 𝐻𝑖𝑔ℎ𝑒𝑠𝑡 𝐻𝑖𝑔ℎ 𝑛 −𝐿𝑜𝑤𝑒𝑠𝑡 𝐿𝑜𝑤 (𝑛) ∗ 100 %𝐷 = 3𝑑𝑎𝑦 𝑆𝑀𝐴 𝑜𝑓 %𝐾 12NSFX Trading Desk
  13. 13. Stochastic Slow %K %D 13NSFX Trading Desk
  14. 14. Stochastic Slow 1. Overbought/Oversold 14NSFX Trading Desk
  15. 15. Stochastic Slow 1. Overbought/Oversold 2. Crossovers 15NSFX Trading Desk
  16. 16. Stochastic Slow 1. Overbought/Oversold 2. Crossovers 3. Convergence/Divergence 16NSFX Trading Desk
  17. 17. Example - MACD, RSI & STOCHS Combined on the S&P Daily 17NSFX Trading Desk
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×