


GLOSSARY 

Moving Average Convergence / Divergence  MACD


The Moving Average Convergence/Divergence indicator (MACD)
is calculated by subtracting the value of a 26period exponential moving average from a 12period
Exponential moving average (EMA). A 9period exponential moving average (the "signal line") of the difference between the 26 and 12 period EMA is used as the signal line.
A positive MACD indicates that the 12day EMA is trading above the 26day EMA. A negative MACD indicates that the 12day EMA is trading below the 26day EMA.
If MACD is positive and rising, then the gap between the 12day EMA and the 26day EMA is widening. This indicates that the rateofchange of the faster moving average is higher than the
rateofchange for the slower moving average. Positive momentum is increasing and this would be considered bullish.
If MACD is negative and declining further, then the negative gap between the faster moving average (black) and the slower moving average (red) is expanding. Downward momentum is accelerating and this would be considered bearish.
The basic MACD trading rule is to sell when the MACD falls below its 9 day signal line and to buy when the MACD rises above the 9 day signal line. Traders sometimes vary the calculation period of the signal line and may use different moving average lengths in calculating the MACD dependent on the security and trading strategy.

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Average Directional Index (ADX) 


ADX evaluates the strength of the current trend, be it up or
down. It's important to determine whether the market is trending or trading
(moving sideways), because certain indicators give more useful results depending
on the market doing one or the other. ADX is an oscillator that fluctuates
between 0 and 100. Even though the scale is from 0 to 100, readings above 60 are
relatively rare. Low readings, below 20, indicate a weak trend and high
readings, above 40, indicate a strong trend.
The indicator does not grade the trend as bullish or bearish,
but merely assesses the strength of the current trend. A buy signal occurs when
+DI moves above DI and a sell signal when DI moves above the +DI.
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Relative Strength Index(RSI) 

RSI is an indicator for overbought / oversold conditions. It is going up when the market is strong, and down, when the market is weak.
The oscillation range is between 0 and 100.Generally, if the RSI rises above 30 it is considered bullish for the underlying stock.
Conversely, if the RSI falls below 70, it is a bearish signal. The centerline for RSI is 50. Readings above and below can give the indicator a bullish or bearish tilt.
Stocks can stay oversold or overbought for long periods of time. Therefore, if RSI has crossed the 30 or 70 "boundary", no action should be taken until it has recrossed it in the opposite direction. For example, if RSI falls below 30, do not buy until the indicator has come back above that level.

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Commodity Channel Index 

Commodity Channel Index (CCI) measures the position of price in relation to its Moving average.
This can be used to highlight when the market is overbought/oversold or to
signal when a trend is weakening.
The indicator is similar in concept to Bollinger Bands but is presented as an indicator line rather than as overbought/oversold levels.
CCI can be used to identify overbought and oversold levels. A share would be deemed oversold when the CCI dips below 100 and overbought when it exceeds +100.
From oversold levels, a buy signal might be given when the CCI moves back above 100. From overbought levels, a sell signal might be given when the CCI moved back below +100.

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Directional Movement
Index 

Directional movement
is a system for providing trading signals to be used for price breaks from a
trading range. The system involves 5 indicators which are the Directional
Movement Index (DX), the plus Directional Indicator (+DI), the minus
Directional Indicator (DI), the average Directional Movement (ADX) and the
Directional movement rating (ADXR). 
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Average True Range 

The Average True Range
indicator is used for determining the volatility of the security. The idea is
to replace the high  low interval for the given period, as the highlow does
not take into consideration gaps and limit moves.

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Volume 

The number of shares
or contracts traded in a security or an entire market during a given period of
time. It is simply the amount of shares that trade hands from sellers to
buyers as a measure of activity.
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Stochastic Oscillator 

Stochastic Oscillator
is a measure of the relative momentum of current prices to previous closing
prices within a given interval. When it is plotted, it is two lines that move
within a range of 0 and 100. Values above 80 are considered to be in
overbought territory giving an indication that a reversal in price is
possible. Values below 20 are considered oversold and again are an indication
that a reversal of the price trend is a higher risk. In a strong trending
environment, the Stochastic Oscillator can stay in overbought or oversold
territory for some time while price continues in a single direction.
The Stochastic Oscillator has two components: %K (black) and %D (red). The most widely used
method for interpreting the Stochastic Oscillator is to buy when either
component rises above 80 or sell when either component falls below 20. Another
way to interpret the Stochastic Oscillator is to buy when %K rises above %D,
and conversely, sell when %K falls below %D. The indicator is considered
bullish, when above 80, and bearish, when below 20.

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Stochastic RSI 

StochasticRSI is an
oscillator that measures the level of RSI relative to
its range, over a set period of time. The indicator uses RSI as the foundation
and applies to it the formula behind Stochastics. The result is an oscillator
that fluctuates between 0 and 1. StochasticRSI measures the value of RSI
relative to its high/low range over a set number of periods.

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Fast Stochastic 

The Stochastic
Oscillator is a measure of the relative momentum of current prices to previous
closing prices within a given interval. When it is plotted, it is two lines
that move within a range of 0 and 100. Values above 80 are considered to be in
overbought territory giving an indication that a reversal in price is
possible. Values below 20 are considered oversold and again are an indication
that a reversal of the price trend is a higher risk. In a strong trending
environment, the Stochastic Oscillator can stay in overbought or oversold
territory for some time while price continues in a single direction. In
relation to a longer term price trend environment, the stochastic provides
little interest.

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Slow Stochastic 

The Slow Stochastic applies further smoothing to the Stochastic oscillator, to
reduce volatility and improve signal accuracy.
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Rate of Change (ROC) 

Price RateofChange (ROC) is a refinement of Momentum  readings
fluctuate as percentages around the zero line. The indicator is designed for use
in ranging markets  to detect trend weakness and likely reversal points.
However, when combined with a trend indicator, it can be used in trending
markets.
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Price Volume Indicator 

On Balance Volume
 Volume is the number of shares or contracts that change ownership over a
given period of time. It is an indication of supply and demand that is
independent from price and can relate a great deal about the relative
enthusiasm of buyers and sellers in the market place. On Balance Volume is one
indicator that is designed to track changes in volume over time. It is the
running total of volume calculated in such a way as to add the day's volume to
a cumulative total if the day's close was higher than the previous day's close
and to subtract the day's volume from the cumulative total on down days. The
assumption is that changes in volume will precede changes in price trend.
Another use of On Balance Volume (OBV) is to look at the trend in the
indicator. A rising trend in the OBV gives sign of a healthy move into the
security. A doubtful trend, or sideways trend in the OBV leaves price trend
suspect and a candidate for a reversal of the trend. A falling OBV trend
signals an exodus from the security despite price activity and leads to the
caution that price may follow if it is not already. As indicated on the graphs
above, look for divergences between the price and the OBV indicator.
Divergences between the peaks warns of a potential fall in prices. Divergences
between the troughs warns of a potential rise in prices.

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Triple Exponential 

Triple Exponential
is a momentum indicator that displays the percent rateofchange of a triple
exponentially smoothed moving average of the security's closing price. It is
designed to keep you in trends equal to or shorter than the number of periods
you specify. 
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William %R 

It is working by
identifying the overbought / oversold levels. The scale extends from 0 to
100.The overbought level is considered 0 to 20, and oversold 70 to 100.As
a confirmation signal, we can wait for the indicator to cross the 50 line.
It is important to remember that overbought does not necessarily imply time to
sell and oversold does not necessarily imply time to buy. A security can be in
a downtrend, become oversold and remain oversold as the price continues to
trend lower. Once a security becomes overbought or oversold, traders should
wait for a signal that a price reversal has occurred. One method might be to
wait for Williams %R to cross above or below 50 for confirmation. Price
reversal confirmation can also be accomplished by using other indicators or
aspects of technical analysis in conjunction with Williams %R.
One method of using Williams %R might be to identify the underlying trend and
then look for trading opportunities in the direction of the trend. In an
uptrend, traders may look to oversold readings to establish long positions. In
a downtrend, traders may look to overbought readings to establish short
positions.

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Accumulation / Distribution 

The Accumulation/Distribution is a momentum indicator that associates
changes in price and volume. The indicator is based on the premise that
the more volume that accompanies a price move, the more significant the
price move.

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Moving Average (MA) 

Moving averages are used to emphasize the direction of a trend and to
smooth out price and volume fluctuations. Typically, upward momentum is
confirmed when a shortterm average crosses above a longerterm average.
Downward momentum is confirmed when a shortterm average crosses below a
longterm average..

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Simple Moving Average
(SMA) 

Simple Moving Averages (SMA) are used to help identify the trend of prices. By creating an average of prices, that "moves" with the addition of new data, the price action on the security being analyzed is "smoothed". The Simple Moving Average is simply an average of values over a specified period of time.

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Exponential Moving
Average (EMA) 

Exponential Moving
Average (EMA) is type of moving average that is similar to a
simple moving
average, except that more weight is given to the latest data. It is calculated
by adding a percentage of yesterday's
moving average to a percentage of
today's closing value. This type of moving average reacts faster to recent
price changes than a simple moving average. The 12 and 26day EMAs are the
most popular shortterm averages, and they are used to create indicators like
the moving average convergence divergence (MACD) and the percentage price
oscillator
(PPO). In general, the 50 and 200day EMAs are used as signals of
longterm trends.

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Volatility Ratios 

Average True Range
 The Average True Range indicator is used for determining the volatility of
the security. The idea is to replace the high  low interval for the given
period, as the highlow does not take into consideration gaps and limit moves.
Chaikin's Volatility  Marc Chaikin measures volatility as the trading
range between high and low for each period. This does not take trading gaps
into account as Average True Range does.
Aroon  The Aroon indicator system consists of two lines, 'Aroon(up)'
and 'Aroon(down)'. It takes a single parameter which is the number of time
periods to use in the calculation. Aroon(up) is the amount of time (on a
percentage basis) that has elapsed between the start of the time period and
the point at which the highest price during that time period occurred. If the
stock closes at a new high for the given period, Aroon(up) will be +100. For
each subsequent period that passes without another new high, Aroon(up) moves
down by an amount equal to (1 / # of periods) x 100.

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Fibonacci 

The Fibonacci technical
indicator measures the distance between a high and a low or between a low and a
high. It divides this distance into levels. The most used levels are 0% , 38.2%
, 50% , 61.2% and 100% of the distance of the rise to the top or fall to the bottom.
As such, the Fibonacci
Retracements theory, expects that a share’s price would retrace (i.e. get back or
return) its initial risedistance or falldistance. The most popular retracements
are 38.2% , 50% , 61.2% and 100% of the previous movement (leg). These retracments
are considered resistance or support levels depending whether the present movement
is upwards or downwards.
When the price is
rising, the Fibonacci Retracements would read from down to up i.e. 0% , 38.2% ,
50% , 61.2% and 100%, while when the price is falling, they would read from up to
down i.e. 100% , 61.2% , 50% , 38.2% , 0% . The values (price) of levels are the
same in both directions but their names in % terms are opposite.
The Fibonnaci indicator
on ASMA Charts is an automatic and not manual as in other popular programs. In Manual
Programs, the user can precisely point to the top and bottom of the preceding cycle
or trend and then apply the result to the following cycle or movement. But in the
Asma automatic Fibonacci indicator the levels are indicated on the last Top and
Bottom and then the user has to project the same levels as resistance or support
levels on the following cycle or trend.
To eliminate confusion,
we have removed the % label of each level and kept the value only.
Also, we remind you
when using the Fibonacci Indicator to increase or decrease the indicator number
on the indicator label so as to ensure that it reaches the last top or bottom that
you are interested in.
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Linear Regression
Channels 

A statistical
measure that attempts to determine the strength of the relationship between
one dependent variable and a series of other changing variables. Linear
regression uses one independent variable to explain and/or predict the
outcome.
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Zig Zag 

Zig Zag is trend following indicator that helps
define what the trend has been, and can be used as a significance test to help
determine when changes in the current price might indicate when the trend of
price might be changing. The zig zag indicators filters out changes in a data
item that are less than a specific amount that you define.
The ZigZag can be used to measure retracements. After an
advance, it is common for a security to retrace a portion of its advance with
a correction. After a decline, it is common for a security to retrace part of
its decline with a reaction rally. According to Dow Theory, 1/3, 1/2 and 2/3
retracements are most likely. Based on Fibonacci numbers, 38.2% or 61.8%
retracement levels are deemed significant.

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Price Oscillator (PPO) 

An indicator which attempts to assess the momentum of price
activity by the use of two or more moving averages, for a predefined time
frame period.

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Support
/ Resistance 

Support : The price level which, historically, a
stock has had difficulty falling below. It is thought of as the level at which
a lot of buyers tend to enter the stock. Often referred to as the "support
level".
Resistance : The price at which a stock or market can trade, but which
it cannot exceed, for a certain period of time. Often referred to as
"resistance level".

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Chaikin
Money Flow 

Chaikin Money Flow  oscillator is calculated from
the daily readings of the Accumulation/Distribution Line. The basic premise
behind the Accumulation Distribution Line is that the degree of buying or
selling pressure can be determined by the location of the close relative to
the high and low for the corresponding period (Closing Location Value). There
is buying pressure when a stock closes in the upper half of a period's range
and there is selling pressure when a stock closes in the lower half of the
period's trading range. The Closing Location Value multiplied by volume forms
the Accumulation/Distribution Value for each period.

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Parabolic SAR 

Parabolic Stop and Release (SAR) is a trend following indicator that is
designed to create a trailing stop. This is a point that follows a prevailing
trend, giving a possible value for a stop loss order that is far enough away
from the original trend to avoid being stopped out with a small consolidation
and retraction moves. The trailing stop moves with the trend, accelerating
closer to price action as time passes giving the path of the indicator a
parabolic look. When price penetrates the SAR a new calculation is started
taking the other side of the market with an initial setting that again allows
a certain amount of initial volatility if the trend is slow to get underway.
If the trend is up, buy when the indicator moves below the price. If the trend
is down, sell when the indicator moves above the price.

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Ultimate
Oscillator 

Developed by Larry Williams and first described in a 1985
article for Technical Analysis of Stocks and Commodities magazine, the
"Ultimate" Oscillator combines a stock's price action during three different
time frames into one bounded oscillator. Values range from 0 to 100 with 50 as
the center line. Oversold territory exists below 30 and overbought territory
extends from 70 to 100.

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Bollinger Bands 

Bollinger Bands are types of envelops that are
plotted at a fixed percentage above and below the moving averages. They are
calculated using standard deviations instead of shifting bands by a fixed
percentage.
Characteristics:
a. Sharp price changes tend to occur after the bands (The two semi
parallel green lines) tighten and become narrower and volatility lessens.
b. When the price moves outside the bands, a
continuation of the trend in that direction is implied.
c. Bottom/Tops that happen outside the bands and are then followed by
Bottoms/Tops made inside the bands are usually and indication of a change and
reversal in the present trend.
d. Moves that originate at one band (Lower or
higher) tend to go all the way to the other band. This observation is useful
when forecasting price targets.
Interpretation:
Bollinger Bands can be imposed over an actual price or another indicator. When
prices rise above the upper band or fall below the lower band, a change in
direction may occur when the price penetrates the band after a small reversal
from the opposite direction.

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Percentage Volume
Oscillator 

The Percentage Volume Oscillator (PVO) is the percentage
difference between two moving averages of volume.

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Envelopes 

An envelope is comprised of two moving averages. One moving average is shifted
upward and the second moving average is shifted downward. .

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Money
Flow Index (MFI) 

(MFI) is a momentum indicator which it is volumeweighted, and is a measure of
the strength of money flowing in and out. It compares "positive money flow" to
"negative money flow" to create an indicator that can be compared to price in
order to identify the strength or weakness of a trend. It is calculated using
a 14 day period. .

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TRIX 

TRIX is a momentum indicator that displays the percent rateofchange of a
triple exponentially smoothed moving average of the security's closing price.
It is designed to keep you in trends equal to or shorter than the number of
periods specified. It can be used to anticipate turning points in a trend
through its divergence with the security price. TRIX line crossovers with its
"signal line" can be used as buy/sell signals as well.
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AROON 

Aroon is an indicator system that can be used to determine whether a stock is
trending or not and how strong the trend is.The Aroon indicator system
consists of two lines, 'Aroon(up)' and 'Aroon(down)'.
When Aroon(up) and Aroon(down) are moving lower in close proximity, it signals
that a consolidation phase is under way and no strong trend is evident. When
Aroon(up) dips below 50, it indicates that the current trend has lost its
upward momentum. Similarly, when Aroon(down) dips below 50, the current
downtrend has lost its momentum. Values above 70 indicate a strong trend in
the same direction as the Aroon (up or down) is under way.
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Keltner Channel 

A volatility based 'envelope' indicator that measures the movement of stocks in
relation to an upper and lower movingaverage band. This indicator, named after
Chester W. Keltner, is used by sophisticated investors to predict the trend of the
market. An overbuy occurs when prices move above the upper band, and an oversell
occurs when prices move below the lower band
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Chaikin's Volatility 

Marc Chaikin measures volatility as the trading range between high and low for each
period. This does not take trading gaps into account 
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Accumulation Swing Index 

The Accumulation Swing Index (ASI) is a cumulative sum of the Welles Wilder’s Swing
Index indicatorThe Accumulative Swing Index, based on the Swing Index, is a swing
or wave system used to capitalize on breakout patterns. ASI is commonly used to
confirm trendline breakouts on price charts.
ASI was developed by Welles Wilder, Jr. as a simple swing system (even though the
calculation itself is relatively complex), with signals generated by breakouts past
previous highs or lows in the index. Trendlines drawn on the ASI chart are also
used to confirm or deny trendline breakouts on a price chart. Any divergence between
the Index and price should also be noted.

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Directional Movement Index 

Directional movement is a system for providing trading signals to be used for price
breaks from a trading range. The system involves 5 indicators which are the Directional
Movement Index (DX), the plus Directional Indicator (+DI), the minus Directional
Indicator (DI), the average Directional Movement (ADX) and the Directional movement
rating (ADXR). The system was developed J. Welles Wilder and is explained thoroughly
in his book, New Concepts in Technical Trading Systems .
The basic Directional Movement Trading system involves plotting the 14day +DI and
the 14 day DI on top of each other. When the +DI rises above the DI, it is a bullish
signal. A bearish signal occurs when the +DI falls below the DI. To avoid whipsaws,
Wilder identifies a trigger point to be the extreme price on the day the lines cross.
If you have received a buy signal, you would wait for the security to rise above
the extreme price (the high price on the day the lines crossed). If you are waiting
for a sell signal the extreme point is then defined as the low price on the day's
the line cross. 
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Chaikin Money Flow 

Developed by Marc Chaikin, the Chaikin Money Flow oscillator is
calculated from the daily readings of the Accumulation/Distribution
Line. The basic premise behind the Accumulation Distribution Line is
that the degree of buying or selling pressure can be determined by the
location of the close relative to the high and low for the corresponding
period (Closing Location Value). There is buying pressure when a stock
closes in the upper half of a period's range and there is selling
pressure when a stock closes in the lower half of the period's trading
range. The Closing Location Value multiplied by volume forms the
Accumulation/Distribution Value for each period. 
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BIAS 

Show the distance of close and moving average. 
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Detrended Price Oscillator 

Detrended Price Oscillator compares closing price to a prior moving
average, eliminating cycles longer than the moving average.
The real power of the Detrended Price Oscillator is in identifying
turning points in longer cycles:
When Detrended Price Oscillator shows a higher trough  expect an upturn
in the intermediate cycle;
When Detrended Price Oscillator experiences a lower peak  expect a
downturn.

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Accumulation/Distribution 

The Accumulation/Distribution is a momentum indicator that associates
changes in price and volume. The indicator is based on the premise that
the more volume that accompanies a price move, the more significant the
price move.

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Momentum 

The Momentum is simply the difference between the current point (price
or something else) and the point N periods ago.
Usage:
The rising line signals that the uptrend is getting stronger, the
horizontal line at zero level means there is no trend, and falling line
means the downtrend is getting stronger.
The momentum can be used for identifying trends, overbought/oversold
conditions and divergences.

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Fast Stochastic 

The Stochastic Oscillator is a measure of the relative momentum of
current prices to previous closing prices within a given interval. When
it is plotted, it is two lines that move within a range of 0 and 100.
Values above 80 are considered to be in overbought territory giving an
indication that a reversal in price is possible. Values below 20 are
considered oversold and again are an indication that a reversal of the
price trend is a higher risk. In a strong trending environment, the
Stochastic Oscillator can stay in overbought or oversold territory for
some time while price continues in a single direction. In relation to a
longer term price trend environment, the stochastic provides little
interest. In its construction it is meant to relate the current periods
momentum to the most recent previous periods of momentum in price in an
attempt to identify periods where momentum may be easing or increasing.
The easing (at a top) or increase (at a bottom) of momentum occurs at
reversal points for the price trend being measured. However changing
momentum also occurs during times when there is no change in the overall
trend in prices and should be understood as a period when a reversal in
price trend is possible but not guaranteed.

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MASS Index 

The Mass Index was designed to identify trend reversals by measuring the
narrowing and widening of the range between the high and low prices. As this
range widens, the Mass Index increases; as the range narrows the Mass Index
decreases.
The Mass Index was developed by Donald Dorsey.

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Vertical Horizontal Filter 

Vertical Horizontal Filter (VHF) was created by Adam White to identify
trending and ranging markets. VHF measures the level of trend activity,
similar to ADX in the Directional Movement System. Trend indicators can then
be employed in trending markets and momentum indicators in ranging markets.
Vary the number of periods in the Vertical Horizontal Filter to suit
different time frames. White originally recommended 28 days but now prefers
an 18day window smoothed with a 6day moving average.

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Disclaimer 