The application of indicators in technical analysis

In addition to fundamental analysis, there is also technical analysis, which can be divided into pattern analysis, wave analysis, and technical indicator analysis. Many investors combine fundamental analysis and technology to improve the accuracy of analysis and achieve the purpose of profitability.

We will continue to launch the application of various analysis in actual combat, in order to enable the majority of investors to sail in the sea. This issue mainly introduces the application of technical indicators in trading.

There are many technical indicators used to analyze the trend, mainly including: MACD smooth moving average convergence and divergence, RSI relative strength index, KD stochastic indicator, MTM momentum indicator, ROC speed of change indicator and WR William indicator. The above indicators MACD, MTM, ROC are more often used in unilateral trend quotes, while RSI, KD, WR are often used in the analysis of volatile quotes. The advantage of using indicators is that they can better grasp the opportunity to enter or leave the market. Of course, not everything can be perfect. The lag of the indicator is the biggest drawback. Often when the indicator sends a clear up (or down) signal, its market has already gone part of the way; but if we can use it well, we can still grasp part of the market. As the old saying goes, there are clouds and soldiers. As long as you can master the analysis of 2-3 indicators, the author believes that investors will be able to flex their muscles in the foreign exchange market. The author mainly introduces MACD,ZhonghuiThe application of RSI and KD indicators in technical analysis.

The main signals of technical indicators are the golden cross, the death cross, and the divergence, which are of technical significance in the MACD, KD, and RSI indicators.

Take the euro as an example: at the end of April 2007, the exchange rate hit a new high and then pulled back. The display on the technical graph shows that the MACD shows a death cross, and the divergence of the trend and technical indicators also sets the stage for its decline in the market outlook (as shown in Figure 1 below). At present, the MACD shows a golden cross, and the market outlook is expected to rise.

The author's general parameter of the RSI indicator is set to 14. The indicator runs within 30-70. If it is higher than 70, it is overbought, and if it is lower than 30, it is oversold. If the indicator is overbought (oversold), it means that the upward (downward) momentum will slow down or there will be a correction. In addition, the indicator and the trend should also be vigilant when there is a deviation.

The KD indicator is a more effective foreign exchange market analysis tool, which mainly runs within the range of 80-20. Like the RSI indicator, if it is higher than 80 or lower than 20, it will be overbought and oversold. The divergence and the death cross of gold are also suitable for the analysis of this indicator.