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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 ...
Moving Average Convergence-Divergence (MACD) is a highly popular technical tool developed by Gerald Appel in the 1960s. MACD analyzes the relationship between moving averages set at different ...
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.
The TSI is a "double smoothed" indicator; meaning that a moving average applied to the data (daily momentum in this case) is smoothed again by a second moving average. The calculation for TSI uses exponential moving averages. The formula for the TSI is:
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.
If OBV fails to go past its previous rally high, then this is a negative divergence, suggesting a weak move. [ 4 ] The technique, originally called "continuous volume" by Woods and Vignola, was later named "on-balance volume" by Joseph Granville who popularized the technique in his 1963 book Granville's New Key to Stock Market Profits . [ 2 ]
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.