Technical Indicators

When you click on this button, a window will open, where you can select from a diverse number of indicators, including trend, Bill Williams and Oscillator indicators.

Trend Explanation:

Moving Average (MA) is an indicator that shows the average price within a defined time period. There are four types of Moving Averages: Simple MA, Exponential MA, Smoothed MA, and Weighted MA. They differ from each other only in terms of the weight coefficients that are assigned to the latest data.

Moving averages are mostly used to define areas of support and resistance, to emphasize the direction of a trend, and to smooth out price and volume fluctuations. The direction of the indicator shows whether a bullish or bearish trend is present in the market at the moment. The intersection of the indicator and the price chart confirms the change in a trend. It is only a confirmation because the change of this indicator is late in comparison with a price change.



Methods of use:

  • When the instrument price rises above its MA, it can be a signal to buy.
  • When the price falls below its MA, it can be a signal to sell.
  • The direction of the MA gives an idea of whether there is a bearish or bullish trend on the market.

Bollinger Band (BB) is an indicator that compares volatility and relative price levels over a period of time. Bollinger Bands adjust to market conditions and change constantly. As soon as the market becomes more volatile, the bands widen due to higher standard deviation; they contract during less volatile times.

The use of Bollinger Bands is based on the fact that prices usually remain within the limits of upper and lower borders. BB are mostly used for determining if the current value of data fields is behaving normally or breaking out in another direction. BB can also be used for identifying when trend reversals should be expected. The variable width of BB is caused by the price volatility. You will also be able to select how many Standard Deviations you want.



Methods of usage:

  • Sharp changes in price will take place when the channel narrows.
  • If prices cross the borderline, it is often a signal that the current trend will continue (A).
  • A price move that originates at one border tends to go all the way to the other border (B).

Standard Deviation is a statistical measure of volatility. It is usually used not as a separate indicator but as a component of other indicators.

In the equity markets, Standard Deviation is mostly used in the stock market to identify the degree of volatility of stock. This indicator can also be applied to FX, mutual funds and CFDs, where it shows how much the return of the fund is deviating from the expected normal returns.

Method of use:

  • The value of this indicator is usually high if prices change sharply.
  • If the value of this indicator is not high, the prices are stable.
  • Before a significant rise/fall in prices, this indicator is usually low.

Bill Williams (Alligator)
The Alligator indicator consists of three Moving Averages with different numbers of bars for smoothed MA. The blue line (Alligator jaw) is a balance line for the timeframe that was used to build the chart (13 bars) smoothed average offset by 8 bars). The red line (Alligator teeth) is also a balance line, but at level lower than the blue one (8 bars smoothed average offset by 5 bars). The green line (Alligator lips) is also a balance line, a level lower than the red one (5 bars smoothed average offset by 3 bars).

The Alligator is mostly used to determine the presence/absence of the trend and its direction. It can also be used together with Eliot waves: if the price is outside the Alligator’s mouth, an impulse wave is being formed; if it is inside the Alligator’s mouth, a correction line is being formed.



Methods of use:

  • When the blue, red, and green lines are crossed or intertwined, there is a flat market; the Alligator is sleeping. The longer it continues, the more the market will move after.
  • When all three lines are not crossed or intertwined and the price is above the Alligator’s mouth, there is an uptrend in the market. At this period the Alligator is awake and hunting.
  • When all three lines are not crossed or intertwined and the price is under the Alligator’s mouth, there is a downtrend in the market. At this period the Alligator is also awake and hunting.
  • When the lines are crossed or intertwined, it means that the market is flat again. At this period the Alligator is full and it may be time to take profit.

Oscillators:
Oscillators (O) is a 34-period simple Moving Average, plotted through the middle points of the bars (H+L)/2, which is subtracted from the 5-period simple Moving Average, built across the central points of the bars (H+L)/2. AO shows the driving force behind the market at present.

Oscillators are mostly used when the trend cannot be clearly traced. AO has three main signals: the saucer (reversed saucer), crossing of the zero line and two pikes. The saucer is a chart consisting of three candlesticks where the second (red) is lower than the first and the third (green) is higher than the second one. Crossing of the zero line takes place when the chart passes from negative to positive values and vice versa. Two pikes is a chart where there is a peak followed by another peak that is higher/lower than the first one. Both peaks should be above or below the zero line.

Methods of use:

  • When the saucer signal is formed above the zero line or when crossing of the zero line is from the negative into the positive side, or when the two pikes are formed below the zero line, this is a buy signal.
  • When the saucer signal is formed below the zero line or when crossing of the zero line is from the positive into the negative side, or when the two pikes are formed above the zero line, this is a sell signal.

Display of Oscillators in Graphs