Moving Average Convergence / Divergence or better known as the MACD is an indicator of a relatively simple and has a good level of reliability. Originally MACD was used by Gerald Appel MACD as a tool in analyzing trends and changing direction daily until the weekly cycle.

MACD uses two Exponential Moving Average (EMA) to indicate overbought or oversold condition that fluctuates above and below the zero line (zero line). On the MACD there are no absolute figures such as restrictions on Stockhastic Oscillator which typically uses the limits 30-70.

Standard MACD consists of two lines. The first line known as the MACD line is the result of the difference of the two EMA EMA 12 and EMA 26. This line is usually served with a thicker line. Companion is a trigger line. This line is the EMA line 9 and is usually served with a thinner line or dashed.

Because the MACD line derived from the difference between the two EMA, there will be two possible outcomes are positive and negative. Positive meaningful indications of bullish, Negative meaningful indications of bearish.

Like moving averages, MACD is also commonly used to identify buy and sell signals and changes in trend. A sell signal is indicated when the MACD line moves to cut from the top down slow line (Dead Cross), and vice versa for a buy signal is indicated when the MACD line moves to cut from the top down slow line (Golden Cross).

Momentum indicators movement often precedes price movement at the time of the change in direction of trend in the trade. Therefore, the Momentum indicator can be used as early indicators (leading indicators).

The use of momentum indicators is similar to the use of indicators Price Rate of Change (ROC). Both these indicators are equally indicated that the rate of change of a product price. However, the Price ROC indicator shows the percentage of price changes while the momentum indicator showing the ratio of price changes.

When the market is at its highest point, Momentum indicator will rise sharply and then dropped so that the direction of movement deviates from the price movement that still continues to rise. Likewise, if market is at its lowest, the Momentum indicator will drop sharply and then rise again precede price movement. Both conditions will cause the direction of movement of Momentum indicators deviate from the direction of price movements.

One of the advantages of this indicator is its ability to see possibilities in the future by providing an early signal for reducing the momentum that followed the end of the trends and changes in direction. Or in other words that is if the trend will end the momentum of the movement will be reduced until eventually penetrate the zero line which marks the end of trends and new trends will occur.

Other uses of this indicator is to determine the current market conditions such as overcrowding, selling or buying interest, which means an imminent change in the price. The price changes will not occur until the indicator leaving the area are selling or buying surplus interests (overbought / oversell).

Sine Wave Indicator, developed by John Ehlers, is a MESA indicators that utilizes 2 sine plots to depict if the market is in a trend mode or in a cycle mode. They call it a trend mode if the plots start to wander the market.

MESA Sine Wave indicator will anticipate cycle mode turning points rather than waiting for confirmation (as the majority of oscillators do). It’s an extremely helpful trait. The indicator also has an extra-advantage that trend mode whipsaw signals are minimized.

The market is in the cycling mode if the 2 plots look like a Sine wave the market. In a trend mode the Sine Wave (green line) and Lead Sine (red line) plots typically weaken in a sideways pattern around the zero-point, running distant and parallel from each other.

If the Sine plot crosses below the Lead Sine plot the sell signal is sent. A purchase signal is sent as the Sine plot crosses over the Lead Sine plot if the market is in cycle mode. It’s worth trading the trend if the market is in the trend mode.

Median price, typical price and weighted close are indicators for reducing noise in a trading chart, and are widely used as filters of other moving average systems.

These indicators, when used alone, do not provide any significant results other than smoothing the graph, but they are key ingredients of many other powerful and popular trend indicators.

Median Price = (High + Low) / 2

The Median Price indicator is the midpoint of the difference between the day’s high and low. The Median Price indicator is just the middle point of every day’s price. The Typical Price and Weighted Close are the same indicators.

These indicators, when used alone, do not provide any significant results other than smoothing the graph, but they are key ingredients of many other powerful and popular trend indicators.

Breadth is defined as the balance between advancing issues (all stocks up at least a penny on the day) and declining issues (all stocks down by at least a penny). In a strong market, advancers will usually overwhelm decliners by a significant margin. The opposite is true when a market turns weak.

The McClellan Oscillator can be extremely effective when trading bullish and bearish reversal patterns. The indicator reveals oversold and overbought conditions similar to other oscillators such as Stochastics. These overbought and oversold indicators are not incorporated in the Market Situation scoring system for the sake of simplicity.

Nevertheless, they are good signals to watch for when trading reversal price patterns. Readings between +50 and +70 signal overbought market conditions in which bearish reversal patterns have a higher probability of succeeding.

It’s better to perform buying after a number of oscillator’s uptrends from the low values or market strength recovery. The oscillator going through zero line upwards or downwards indicates buy or sell signals for a medium term accordingly.

To calculate mass index, use the following ways:
1. Calculate the exponential moving average of 9 days difference between the highest and lowest prices.
2. Calculate the exponential moving average 9 days from the results of step 1.
3. The result of step 1 divided by the result of step 2.
4. Total the results of step 3 for 25 periods (eg 25 days).

The Use of Mass Index

According to Dorsey, the most important pattern to note is the change in trend direction is very large (reversal bulge). This reversal bulge occurs when 25-period Mass Index rises above 27.0 and then dropped below 26.5. If this happens, the change in price direction is expected to occur. Overall price trend is not too important to be noticed.

To indicate a sell signal and buy using reversal bulge, the method used is usually a moving average 9-day exponential. If the reversal bulge is detected and its moving average trend down, then comes the buy signal. Conversely, if the reversal bulge is detected and its moving average trend up, then comes the sell signal.

This method is usually combined with the volume of sales and purchase transactions of shares to determine the market conditions. There are four combinations of values of MFI and volume of transactions, namely the Green market conditions, Fake, Squat, and Fade.

When BW MFI and volume increases at the same time, this means the market is moving in one direction and many traders to participate in these markets. This is a good time to be in the market. When BW MFI and volume down at the same time, this means the interest of the market traders began to fade. It often happens to the front to the end of a trend.

When BW MFI higher and lower volume, this means the market is generally moving in one direction but no participant to build volume. Price movements caused by traders who speculate.

When BW MFI down and volume up, it means there is the battle between bulls and bears (with a large volume) and its strength is almost the same (price does not change significantly). This makes a significant main movement in the opposite direction.

Linear regression in the history of mathematics was first developed by Gauss that a mathematician in 1809. Then Gilbert Raff use this principle to trade shares for the first time. The concept of price inflation used to calculate the price of basic needs, it can be applied to measure the price trend based graphics.

Gilbert Raff said that he uses Regression Channel to calculate accurately the movement of stock prices, bonds, mutual funds and commodities.

The method used in linear regression is :
1. The movement of the indicator shows the trend of rising (bullish) or down (bearish).
2. If through the price it will form a new trend.

This indicator is very easy to use to measure the price trends. With the help of a MA line 1 then we can conclude that if the LR line through the price it will form a new trend.

The nature of this indicator is lagging or too late means that if this indicator is used alone then we do not know when prices will stop rising or falling. It’s recommended that you add the oscillator indicators such as RSI or stochastic to anticipate this.

Klinger Oscillator (KO) set out to develop a volume-based indicator to help in both short- and long-term analysis. This oscillator is a construct of volume and is used to determine whether it (volume) is confirming price changes.

The Klinger Oscillator (KO) is intended to show when price changes are confirmed by volume. The price is expected to follow the Klinger Oscillator if there is a divergence between the price and the indicator.

The most dramatic indicator according to Klinger turns up when the difference from the implied price action and KO occurs on new highs or new lows in the area of overbought or oversold.

Trader should buy when the Klinger Oscillator takes unusually low values below zero then goes up over the trigger line during the period of price being in an uptrend, that means price is higher than 89-day exponential moving average. Trader should sell when the Klinger Oscillator takes extremely high values and then goes lower through the trigger line during a downtrend that means the price which is lower than an 89-day exponential moving average.

The indicator is named after Chester W. Keltner (1909-1998) who described it in his 1960 book How To Make Money in Commodities. But this name was applied only by those who heard about it from him. The Keltner Channel is used to signal price breakouts, show trend, and give overbought and oversold readings.

Overbought is seen when the price comes closer to the upper band, whether oversold is shown by the price approaching to the lower band.

Because the Keltner Channel was created to take advantage of volatility swings and follow market trends, it is not effective in sideways markets.

The Keltner channel indicator is primarily used by savvy investors to predict market trends. There are two bands on a Keltner channel, which are drawn above and below an exponential moving average. The Keltner channel is based on the Average True Range.