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As the D in MACD, "divergence" refers to the two underlying moving averages drifting apart, while "convergence" refers to the two underlying moving averages coming towards each other. Gerald Appel referred to a "divergence" as the situation where the MACD line does not conform to the price movement, e.g. a price low is not accompanied by a low ...
The DPO is calculated by subtracting the simple moving average over an n day period and shifted (n / 2 + 1) days back from the price. To calculate the detrended price oscillator: [5] Decide on the time frame that you wish to analyze. Set n as half of that cycle period. Calculate a simple moving average for n periods. Calculate (n / 2 + 1).
A moving average is commonly used with time series data to smooth out short-term fluctuations and highlight longer-term trends or cycles - in this case the calculation is sometimes called a time average. The threshold between short-term and long-term depends on the application, and the parameters of the moving average will be set accordingly.
Triangles within technical analysis are chart patterns commonly found in the price charts of financially traded assets (stocks, bonds, futures, etc.).The pattern derives its name from the fact that it is characterized by a contraction in price range and converging trend lines, thus giving it a triangular shape.
Stochastic divergence. An alert or set-up is present when the %D line is in an extreme area and diverging from the price action. The actual signal takes place when the faster % K line crosses the % D line. [6] Divergence-convergence is an indication that the momentum in the market is waning and a reversal may be in the making.
As with most oscillators, divergences can also be applied to increase the robustness of signals. A positive divergence below −100 would increase the robustness of a signal based on a move back above −100. A negative divergence above +100 would increase the robustness of a signal based on a move back below +100.
Download as PDF; Printable version ... A Chaikin oscillator is formed by subtracting a 10-day exponential moving average from a 3-day exponential moving average of ...
The relationship between different moving average trading rules is explained in the paper "Anatomy of Market Timing with Moving Averages". [4] Specifically, in this paper the author demonstrates that every trading rule can be presented as a weighted average of the momentum rules computed using different averaging periods.