TECHNICAL INDICATOR

Source :
Edwards Mages, Technical Analysis of Stocks Trends 9 th Edition, CRC Press, 2007 [EM]
Alexander Elder, The New Trading for a Living, John Wiley and Sons, 2014 [AE]

ALEXANDER ELDER, divide Technical Indicator to 3 category:

1. Trend-following indicators include moving averages, MACD Lines (moving average convergence-
divergence), the Directional System, On-Balance Volume, Accumulation/Distribution, and others.
Trend-following indicators are coincident or lagging indicators—they turn after trends reverse.
2. Oscillators help identify turning points. They include MACD-Histogram, Force Index, Stochastic, Rate
of Change, Momentum, the Relative Strength Index, Elder-ray, Williams %R, and others. Oscillators
are leading or coincident indicators that often turn ahead of prices.
3. Miscellaneous indicators provide insights into the intensity of bullish or bearish camps. They include
the New High–New Low Index, the Put-Call Ratio, Bullish Consensus, Commitments of Traders, and
others. They can be leading or coincident indicators.

Edwards Mages, Chart Patterns to be traded in conjuction with indicators:

- Reversal Pattern : Head and Shoulders, Rounding Tops/Bottoms

- Basic Trendline pattern (Higher High-Lower Low) (reliable 3 point)
- In equity : triangle, rectangle, flag pattern
- In futures : triangle, rectangle, flag, support resistance, price gaps become unreliable due to
supply/demand factors established by hedging. In commodity, triangle break tends to stronger
when do not occur in the apex, same at stocks
- Always check bigger timeframe to know the trend.
- Chart pattern need timing indicators for confirmation before entry