Reading Assignments: Indicators

TA & Algo Trading Course
#321

Lesson 15 – Reading Assignment:
Trend Trading – The 4 most common Indicators

  1. What is MACD and how is it used?

A moving average convergence divergence (MACD) indicator is an oscillating indicator that looks for “Trend Reversals”. It has two components and moves within a band with zero as the middle line.

The first component is a histogram which, if above zero, gives a buy-signal and which, if below zero gives a sell signal.

The second component are two signal lines: a fast one and a slow one. If the fast line moves below the slow line = sell signal. If the fast line moves above the slow line = buy- signal.

  1. What is the difference between MACD and RSI?

The MACD is primarily used to measure the strength of price movement (short term momentum) while the RSI indicator measures to what extend a market is overbought (above 70) or oversold (below 30) in relation to the recent price level.

  1. What is OBV and how is it used?

The (OBV) On-Balance Volume indicator compiles the volume information into a single line and when showing an uptrend signals that the price will likely trend higher and vice versa.

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#322
  1. Is a slow and fast moving average to determine the direction of the market.
  2. MACD tells you direction RSI tells you over bought and sold.
  3. OBV measures volume between up days and down days. It shows crowd sentiment that can predict bullish or bearish outcomes.
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#323

1.What is MACD and how is it used?
The MACD acts both as a trend following and momentum indicator. Oscillations happen above and below the zero line. The main usage is to look for crossovers. When the fast line crosses the slow line from the top, it is interpreted as a buy signal. When the fast line crosses the slow line from below, it is interpreted as a sell signal.

2.What is the difference between MACD and RSI?
In the case of the RSI, there is just one line oscillating between 0 et 200 showing overbought/oversold positions. The MACD uses two lines and when these cross, this is an indication of buy/sell.

  1. What is OBV and how is it used?
    OBV is an indicator, which shows “cumulative buying/selling pressure by adding the volume on up days and subtracting volume on down days.” It indicates whether a certain trend is confirmed by the volume. When the price is growing but OBV is flat, it signals that their might be a trend reversal and vice versa. Ideally, a rising price should be accompanied by a rising OBV and vice versa - any divergence may signal a trend reversal.
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#324
  1. The MACD is the moving average convergence divergence and when 2 MA cross eachother it gives a buy or sell opportunity.
  2. the movement of the RSI is containted between 0 and 100 it can tell you when the stock is overbought and when its time for a correction. MACD is used to trend the strength of the market
  3. the OBV measures the volume flow it determines the buying and selling pressure the OBV should confirm the overal trend
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#325

Indicators Reading Assignment.

  1. MACD (Moving Average Convergence Divergence) is an oscillating indicator that can help traders quickly spot increasing short term momentum. It can be use to identify trending, momentum, crossovers and signals.

  2. Difference between MACD(Moving Average Convergence Divergence) and RSI (Relative Strength Index) is, MACD fluctuates above and below zero. RSI movement, on the other hand, is contained between zero and 100 (0 and 100).
    RSI is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought and oversold condition in the price of a stock.

  3. OBV (On Balance Volume) is an indicator that measures cumulative buying and selling pressures by adding the volume on “up” days and subtracting volume on “down” days. It is used, ideally, to confirm trends. A rising price should be accompanied by a rising OBV. A falling price should be accompanied by a falling OBV.

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#326

Macd: Moving average convergence divergence, oscillating indicator that varies over time within a band

RSI is a relative strength indicator , its movement is contained between zero & 100

OBV=on balance volume, single indicator. Based on volume

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#327
  1. moving average converge diverge to find out the trend, if it goes above 0 the trend is positive( buy), if it goes below 0 the trend is negative( sell)
  2. relative strength index : it moves between 0 and 100 . when is over 70 the asset is overbought and when is below 30 the asset is oversold. the 70 level can be reached in strong uptrends but that doesen´t mean is time to sell . ussually the 50 level is used
  3. on balance volume . represents the volume of all transaction in a given period of time . if the price goes up its best that the volume goes up and if the price goes down its best that the volume goes down
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#328
  1. What is MACD and how is it used?
    The moving average convergence divergence (MACD) is a kind of oscillating indicator.
    Using this strategy, potential buy signals occur when the MACD moves above zero, and potential sell signals when it crosses below zero.
  2. What is the difference between MACD and RSI?
    The(RSI is another oscillating indicator but its movement is contained between zero and 100 so it provides different information than the MACD. Indicated overbought or oversold conditions.
  3. What is OBV and how is it used?
    On-balance Volume takes a significant amount of volume information and compiles it into a single one-line indicator. The indicator measures cumulative buying and selling pressure by adding the volume on “up” days and subtracting volume on “down” days. Ideally, the volume should confirm trends. A rising price should be accompanied by a rising OBV; a falling price should be accompanied by a falling OBV.
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#329

  1. What is MACD and how is it used?
    MACD is an oscillating, trend - following, and momentum indicator that varies over time within a band (above and below a centerline, the MACD fluctuates above and below zero.)

  2. What is the difference between MACD and RSI?
    Both are oscillating indicators but RSI´s movement is contained in a range from zero to 100. MACD looks at moving average in the price, while RSI looks at the periods in time where an asset is overbought.

  3. What is OBV and how is it used?
    OBV takes a significant amount of volume information and compiles it into a single, one -line indicator.The indicator measures cumulative buying and selling pressure by adding the volume in “up” days and subtracting volume in “down” days. It is used as a way to confirm trends.

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#330

  1. What is MACD and how is it used?
    MACD, The moving average convergence divergence is an oscillating indicator that gives traders a buy or sell opportunity when 2 Moving averages cross eachother.

  2. What is difference between MACD and RSI?
    RSI is showing is there overboughtness or oversoldness in the market. MACD tells the direction of the trend.

  3. What is OBV and how is it used?
    OBV (On-balance volume) is summary of volume and it can be used to identify trends.

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#331

  • What is MACD and how is it used?
    = Moving Average Convergence Divergence, is a technical analysis indicator that varies over time within a band. It is both a trend indicator and a momentum indicator. A MACD has two lines—a fast line and a slow line. A buy signal occurs when the fast line crosses through and above the slow line. A sell signal occurs when the fast line crosses through and below the slow line.

  • What is the difference between MACD and RSI?
    = RSI is another oscillating indicator but its movement is contained between zero and 100 so it provides different information than the MACD. With the RSI you can confirm wether a asset is overbought or oversold. If RSI is above 70, this may be an indication that the asset os oversold and a correction is about to happen, if it is beneath 30 it may be an indication the asset is oversold and a upward trend is about to happen. The RSI do not work alone though, it should only be used to confirm a trend as any other indicator.

  • What is OBV and how is it used?
    On Balance Volume, it takes the volume and converts it to a line so it is easier to see a trend happening, upward or downward.

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#332
  1. MACD is a fluctuating indicator which fluctuated above and below 0. It shows the current trend and momentum.
  2. The difference between MACD and RSI is that they are based on different data. RSI measures the magnitude of recent price changes. Also while MACD oscillates above and below 0 RSI oscillates between 0 and 100
  3. OBV is an indicator for momentum and shows the volume being moved and can predict bull or bear movements.
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#333

  1. The MACD (Moving Average Convergence Divergence) is an indicator that reveals the trend direction, using a center line with wave moving above and below it, where once the wave is below, the trend is in a bearish movement. The opposite can be assumed when the wave is above it. The indicator also includes 2 moving averages that also pass along the center. One is a longer period ma and the other is a shorter ma.

  2. The RSI (Relative Strength Index) is a similar indicator that is just a bit more simple. It consists of a simple moving average trend line that ranges from 0-100. It indicates whether an asset is oversold or overbought.

  3. The OBI (On Balance Volume) takes volume from a longer time frame and puts it into a single trend line. The OBI indicator gives legitimacy to uptrends or downtrends. When the price and the OBI match up, it indicates that the entire market is for the most part in agreement with the direction.

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#334
  1. What is MACD and how is it used? The moving average convergence divergence is oscillating indicator that spots increasing short-term momentum. The MACD uses two different time periods which overlap helping to identify a trend that is accelerating this is often used as an entry and exit signals.
  2. What is the difference between MACD and RSI? The relative strength indicator is another oscillating indicator, but its movement is contained between zero and 100. One way to interpret to RSI is by viewing the price as overbought at 70 and due for a correction, at close to 30 is oversold. The MACD looks at the rate of change in price movement and different visual information to help you trade.
  3. What is OBV and how is it used? The On-balance volume take a significant amount of data over a time period and complies it into a line that will indicate the overall direction of an instrument trending direction going up or down. The OBV can be used to identify if a stock is going top out or bottom out and general direction.
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#335

  • The moving average convergence divergence (MACD) is a kind of oscillating indicator that can help traders quickly spot increasing short-term momentum (up or down).

  • RSI’s (The relative strength index) movement is comprised between 0 and 100; MACD movement moves above and below 0 an 100. If the indicator in the histogram is above 70 means it is overbought. Conversely, if the indicator in the histogram is below 30 means it is oversold.

  • OBV (on-balance volume) indicator measures cumulative buying and selling pressure by adding the volume on “up” days and subtracting volume on “down” days.

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#336

  1. MACD is a kind of oscillating indicator. It has 2 lines which fluctuate above and below zero. Above 0 is a buy signal, bellow 0 sell signal. An additional signal from MACD is when the fast line crosses over the slow line, which indicates buy signal and vice-versa for a sell signal.

  2. RSIs movement is contained between zero and 100, whereas MACDs is around zero.

  3. OBV indicator measures cumulative buying and selling pressure by adding the volume on “up” days and subtracting volume on “down” days. If OBV is rising and the price isn’t, it’s likely that the price will follow the OBV in the future and start rising. If the price is rising and OBV is flat-lining or falling, the price may be near a top. If the price is falling and OBV is flat-lining or rising, the price could be nearing a bottom.

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#337

  1. The moving average convergence divergence (MACD) is a kind of oscillating indicator and it’s used to spot trends and momentum.

  2. RSI measures how overbought something is while the macd tracks the trend of something.

  3. OBV or on-balance volume is a volume indicator with a trend line and it’s used to track changes in overall market trends finding possible tops or bottoms in the market.

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#338
  1. What is MACD and how is it used?

moving average convergence divergence (MACD); technical analysis indicator that varies over time within a band (above and below a centerline; the MACD fluctuates above and below zero. It is both a trend-following and momentum indicator. A MACD has two lines—a fast line and a slow line.

A buy signal occurs when the fast line crosses and goes above the slow line.

A or, potential buy signals occur when the MACD moves above zero, and potential sell signals when it crosses below zero. when the MACD lines are below zero for a constant period of time, the trend is likely down.

sell signal occurs when the fast line crosses through and below the slow line Signal line crossovers can also provide additional buy and sell signals.

look at which side of zero the MACD lines are on in the histogram below the chart. If the MACD lines are above zero for a sustained period of time, the stock is likely trending upwards.

  1. What is the difference between MACD and RSI?

Relative Strength Index (RSI)

Is another oscillating indicator but its movement is contained between zero and 100 so it provides different information than the MACD.

to interpret the RSI price action as “overbought” - and due to correct - is when the indicator in the histogram is above 70, and

to interpret the RSI price action as ‘oversold’—and due for a bounce—is when the indicator is below 30.3

In a strong uptrend, the price will often reach 70 and beyond for sustained periods of time.

For downtrends, the price can stay at 30 or below for a long time.

A generally overbought and oversold levels can be accurate occasionally, they may not provide the most-timely signals for trend traders.

An alternative is to buy close to oversold conditions when the trend is up and place a short trade near an overbought condition in a downtrend.

. A buy signal occurs when the long-term trend is up if the RSI moves below 50 and then back above it. AS in, a pullback in price has occurred. So, the trader buys once the pullback appears to have ended (according to the RSI) and the trend is resuming. The 50-levels are used because the RSI doesn’t typically reach 30 in an uptrend unless a potential reversal is underway. A short-trade signal occurs when the trend is down and the RSI moves above 50 and then back below it.

  1. What is OBV and how is it used?

On-Balance Volume (OBV)

Volume itself is a valuable indicator, and on-balance volume (OBV) takes lots of volume info and compiles it into a single one-line indicator. The indicator measures cumulative buying and selling pressure by adding the volume on “up” days and subtracting volume on “down” days.

Ideally, the volume should confirm trends. A rising price should show a rising OBV; a falling price show a falling OBV.

When a share is trending higher along with OBV and OBV didn’t drop below its trendline, it was a good indication that the price was likely to continue trending higher even after the pullbacks.

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#339

What is MACD and how is it used?
Smooth price data, it is used to measure the strength of trends.

What is the difference between MACD and RSI?
MACD indicates strength of trends while RSI indicates the overboughtness of a market.

What is OBV and how is it used?
It means On Balance Volume, it is usually used to confirm trends, it identifies buying or selling pressure.

#340

Excellent answers, It’s easy to understand. Please keep them like that :muscle:

Carlos Z.