In the Analyze method T.A Mechanical / Computerized needed a computer. There are some computer software that can be used for this purpose. However, the most common used is the Metastock version 6.52 or 7.00. Besides Metastock , other programs provided by Reuters also can be used in analysis. This software can analyze the use of some indicators, such as Moving Average, Stochastic, directional Movement Index, and others. Each of indicator has a different formula to each other. A good trader usually do the testing or simulation first toward the parameter that can be used in the respective indicator. Once found the correct parameters then these parameters become the parameters for the basic commodity/ security that being tested.
Note that each of the commodity/security have different parameter in the indicators used. So do the simulation/testing parameters on the commodity/security one by one, then perform the analysis.
1. MOVING AVERAGE
Moving Average (MA) shows the average price movement at particular period. For example, its parameters is 9, that means the average price closing / closing price during the last 9 period. The bigger the MA parameters, the graph that the establishment will be more sloping.
1) If the price above the MA, then: bullish period
2) If the price under the MA, then: bearish period
3. ADX DIRECTIONAL INDICATORS ( DIRECTIONAL MOVEMENT INDEX )
The graph is shown with DI + and DI- If the second graph DI+ and DI- is cut each other so the price is estimated to have the turn over / rebound.
4.RELATIVE STRENGTH INDEX ( RSI )
This indicator shows whether the price has reached overbought condition (like saturated) or oversold (saturated selling). If the graph has been shown that the price was overbought, it is better to make a sell, if the graph shows that prices have been oversold, it is better to make a buy.
High RSI occurs if the high price rise sharply
Low RSI occurs when prices go down sharply Graphic
RSI is in between 0% and 100% g
nature: Moving slowly, if the price reaches overbought or oversold. After a turn normal to the area, then the graph will move back normal.
5. COMMODITY CHANNEL INDEX ( CCI )
CCI usually indicates the normal price movement if it is in the area 70% to 80%, and will fall to +100% to – 100%. If CCI is located in the area above the + 100%, then: Buy / Long Position If CCI is located in the area below – 100%, then: Close Sell (Long Liquidation) Similarly, when prices fall below – 100%.
MACD is the difference between MA in the long term and short term
- If the MACD Oscillator is above the line), then: Signal BULLISH
– if the MACD Oscillator is below the 0 line, then: Signal BEARISH
- The red line: Convergence and divergence between Moving Average 2
– The Green line: Convergence and divergence between the MACD and MA
- If the red line is above the green line: Signal BULLISH
– If the green line is above the red line: Signal BEARISH