STOCK TREND ANALYSIS WITH TECHNICAL INDICATORS
GLOSSARY OF TECHNICAL INDICATORS SHOWN
A Moving Average is an average of the closing prices over a selected number of days. A simple Moving Average is calculated by adding the prices for a number of periods and dividing by the number of periods. When the stock prices rise above their downward trend line and then also rise above their moving average, you have additional confirmation that a bottom has occurred in the stock.The 30-day average line is shown in red, the 15-day average line is shown in green, and the 5-day average line is shown in white.
The Directional Movement Index is a unique filtered momentum indicator developed by Welles Wilder in 1978. It is based on the assumption that markets exhibit strong trends only about 30% of the time and provides entry into trades only when markets exhibit significant trending characteristics. This indicator uses exponential moving averages and ratios using the high, low and close price data on a scale that ranges from 0 to 100. The basics indicate that you should enter long when +DI crosses over the -DI line and sell or sell short when -DI crosses over the +DI line. The +DI line is shown in red and the -DI line is shown in green.
The TRIX indicator was developed by Jack Hutson in the early 1980s. This indicator shows the percent rate of change of a triple exponentially smoothed moving average of a security's closing price. This indicator filters out insignificant cycles and produces a smoothed line that closely follows price. One interpretation of this indicator suggests that trades should be placed when it changes direction.
The Money Flow index (MFI) is a volume weighted indicator that gives an interpretation based on activity and not solely on price movements. The up and down stock price averages are multiplied by the respective volumes to produce an index that tracks money flow activity in a stock. The basics suggest that when the index is below 20 a long position should be considered. A short position should be considered when the index is above 80.
As a general rule, no single indicator should be used to base trading decisions on. Two or more indicators should be used to confirm trading decisions. The more indicators that confirm a trend, the more weight any results should be given in the buy/sell decision making process. These interpretations are based on the technical analysis community. These interpretations should never be taken as to give advice on buying and selling of securities directly without confirming research from other sources, and are only interpretations of that indicator by the technical analysis community.