http://todobolsa.turincon.

com

Technical Indicators -- Definitions and Explanations Candlesticks -- Definitions and Explanations Chart Patterns -- Discussion and Examples

http://todobolsa.turincon.com

Education | Technical Indicators | Candlesticks | Chart Patterns Technical Indicators With price volatility at an all-time high, it is becoming increasingly important for the investor to recognize patterns in the movements of the stocks they own or are interested in purchasing. The interpretation of market activity using technical analysis provides clues to the investor as to the future behavior of the price. Generally speaking, the technical investor will use a combination of price, volume and time-sensitive technical indicators to maximize their profits. This page provides explanations for a complete list of technical indicators utilized by IQ Chart, IQC Corporation's award-winning technical analysis charting software. Proprietary IQC Zone Money Flow Relative Strength Ranking (RSR) Conventional Breadth Advance/Decline On Balance Volume (OBV) Bollinger Bands Parabolic SAR Commodity Channel Index (CCI) Relative Strength Index (RSI) Directional Moving Index (DMI) Stochastics Linear Regression Ultimate Oscillator Moving Average Convergence/Divergence (MACD) Volatility McClellan Oscillator Volume Momentum William %R Moving Average

http://todobolsa.turincon.com

Education | Technical Indicators | Candlesticks | Chart Patterns Technical Candlesticks Recognizing patterns in the market is a critical resource for today's trader. Japanese candlestick charting, a centuries-old technique used to forecast price behavior, can be used to further the investor's understanding of dozens of frequently reoccurring market scenarios. Combining candlestick charting techniques with traditional technical approaches creates a powerful formula for the savvy investor. This page provides an introduction to candlestick charts and descriptions for the complete list of candlestick chart patterns utilized by IQ Chart, IQC's award-winning technical analysis charting software. Basic Patterns Introduction Long Days Short Days Marubozu Spinning Tops Doji Stars & Rain Drops Paper Umbrella Reversal Patterns Hammer Hanging Man Engulfing Harami Harami Cross Inverted Hammer Shooting Star Piercing Line Dark Cloud Cover Doji Star Morning Star Evening Star Morning Doji Star Evening Doji Star Abandoned Baby

http://todobolsa.turincon.com

Education | Technical Indicators | Candlesticks | Chart Patterns Chart Patterns Stock charts create advantages for technical investors by helping them identify the underlying trend or pattern that is moving the price up or down. Being familiar with trendline formations can help measure investors overall sentiments towards the stock and the company. Chart patterns illustrate reoccurring situations that face investors every trading day. Below is a list of chart patterns covered in this section. Alpha Descending Trend Channel Ascending Trend Channel Descending Trendline Ascending Trendline Bar Chart Diamond Beta Dormant Bottom Broadening Formation Double Bottom Candlestick Chart Double Top Climactic Top Head and Shoulders Closing the Gap Horizontal Trend Channel Confirmation/Divergence Linear/Logarithmic Scale Cup and Handle Right-Angled Broadening Triangle Cycle

if it is firmly within the bullish zone. There are two zones on the charts: Bullish zone (blue/green) and Bearish zone (red) Due to the algorithm's complexity. entry may be warranted. here are several more conventional interpretations of the indicator: Market Climate q IQC Zone can be used to determine the appropriate climate when selecting stocks. q If the colors are fluctuating rapidly in a short or intermediate time frame.com Education | Technical Indicators | Candlesticks | Chart Patterns IQC Zone Definition: IQC Zone is a proprietary indicator developed by IQC Corporation. there is not enough data to calculate IQC Zone. one might consider delaying entry.turincon. one may consider protecting current profits by standing aside as the market smooths. q When the indicator changes from bullish to bearish. it may indicate a trend reversal or period of investor uncertainty. q When the indicator changes from bearish to bullish. but can be an important consideration to trading and investment decisions when integrated into an overall trading or investment approach. However. The opposite conditions can hold true for determining a proper exit point. IQC Zone is only available to stocks with history of more than one year. Although there are many powerful methods for incorporating IQC Zone into an investment scheme. backtested over thirty years of historical data. this interpretation is not well-suited for intraday or very short-term trading approaches. If other indicators suggest an entry point while the security is in the bearish zone. one might consider entering the market when verified with other indicators. It utilizes an advanced artificial intelligence (AI) algorithm to generate bullish and bearish signals.http://todobolsa. and the indicator is charted with gray colors until it has been publicly traded for one year's time. one might consider exiting the market when verified with other indicators. For IPO stocks. Interpretation: IQC Zone is not an absolute buy or sell signal. q Because IQC Zone is calculated at the end of day only. Market Timing IQC Zone can be used as an intermediate-term trend indicator when the color changes. Risk Minimizing When the color changes under certain circumstances. q When the indicator turns from a prolonged bullish period to bearish. one may consider .

com closing any open positions until a resumption of the trend or a trend reversal is confirmed.http://todobolsa. Index | Previous | Next .turincon.

Index | Previous | Next . If these two trades comprised the entire trading day. and decreased by the shares traded on the level of a downtick.com Education | Technical Indicators | Candlesticks | Chart Patterns Money Flow Definition: Money Flow is one of the more sophisticated and powerful technical indicators relating price to volume.400. The value increases by the shares traded on the level of an uptick. If there is then a downtick on 600 shares traded. while money flow would have increased by 4.000. price would have ended even for the day. money flow will decrease by 600. Therefore. q When price is increasing while money is flowing out of the security. it is a sign that some savvy buyers are accumulating the stocks. Interpretation: Signals are generated when there are divergences between the Money Flow and price. and is calculated based in each tic during the trading day. q When the price is trending downward while money is flowing into the security. if there is an uptick on 5.turincon.http://todobolsa. it is a warning of an impending collapse in the price of the stock.000 shares traded. money flow will increase by 5.

Index | Previous | Next . RSR measures the perfromance of a stock based on the past year's worth of data.turincon. Many of the biggest price advances in recent history have been for stocks with an RSR topping eighty.com Education | Technical Indicators | Candlesticks | Chart Patterns Relative Strength Ranking Definition: Relative Strength Ranking (RSR) is based on the idea that most successful stocks must rank well as compared to the overall market based on several criteria. q Avoid laggard stocks with low RSR. where each number can be considered a performance percentile out of all available individual stocks in the market. q Choose leading stocks with high RSR.http://todobolsa. Interpretation: Relative Strength Ranking can be used as part of an overall selection criteria for purchasing new stocks. and as verification for a stock that has limited potential for a major price advance. Relative Strength Ranking is measured on a scale of 0 to 100.

Remember. it can be considered very bearish conditions. If it falls below.66. and confirmed by other indicators for individual stocks or industries. The neutral point of the Breadth Advance/Decline indicator is . the number of declining issues pushing the market downward can be correlated with the probability for further declines. and not individual stocks.37. potentially forecasting an extended period of strong growth. When the indicator goes from positive to negative (crosses above .2 with 10 days) can indicate that the market has shifted from a simply overbought market to one of true weakness. Likewise. potentially forecasting a prolonged bear market. it can be considered very bullish conditions.500 in a range of zero to one.500) a bullish climate can be interpreted for the market. When the Breadth Advance/Decline goes above .http://todobolsa. When the indicator goes from negative to positive (crosses above .turincon. A steep increase (defined as approximately . This is based on the concept that the number of advancing securities accompanying a market rise is positively correlated with the probability for further advances. Other indicators can verify whether these conditions warrant an overbought/oversold market or whether the market will continue in its current trend. A second type of interpretation involves the rapidity of a rise or decline in the indicator. Index | Previous | Next . It is an indicator designed to track the momentum of the broader market and anticipate large upswings or downswings in price. .com Education | Technical Indicators | Candlesticks | Chart Patterns Breadth Advance/Decline Definition: The Breadth Advance/Decline is a market breadth indicator developed by Martin Zweig. the Breadth Advance/Decline studies the entirety of the NYSE. A rapid decline (defined as approximately . Interpretation: There are several common modes of interpretation for Breadth Advance/Decline. and confirmed by other indicators for individual stocks or industries. The Breadth Advance/Decline is calculated by taking the 10 day simple moving average of the number of advancing issues and dividing that number by the sum of the total amount of advancing issues and the total amount of declining issues on the New York Stock Exchange. One type of interpretation involves extremely bullish or bearish behavior. A final type of interpretation involves a crossover of the neutral line.2 within 10 days) can indicate that the market has shifted from an oversold market to one of robust strength.500) a bearish signal can be interpreted for the market.

OBV's value will decrease by 25. Conversely.000.http://todobolsa. If OBV is trending up while price is trending down. It assumes that when a security closes up for the day. the security could be heading for an upswing in price. Index | Previous | Next . if the price ends up for the day on 10.000 shares traded. and tries to capture the buying and selling pressure in the market.com Education | Technical Indicators | Candlesticks | Chart Patterns On Balance Volume Definition: On Balance Volume (OBV) relates price to volume. OBV's value will increase by 10. Interpretation: Proponents of On Balance Volume maintain that trend changes in OBV occur before trend changes in price. Therefore. the amount of volume on a down day represents selling power.000.turincon. Should the price decrease on 25. the number of shares transacted represent buying power. Therefore. a price collapse is possible.000 shares. if OBV is going down over time while price is increasing.

The greater the period of less volatility. and the lower band is the standard deviation multiplied by the same given factor below the simple moving average. When a stock is near the upper or lower limits of the trading bands is when an investor should pay closest attention." Mr. Interpretation: The standard interpretation is that Bollinger Bands do not give absolute buy and sell signals. which could indicate a continuation. in turn. the higher the propensity for a price breakout.turincon. the correction falls short of the average. for they vary in distance from the moving average of a security's price based on the security's volatility.5 standard deviations.http://todobolsa.5 standard deviations. allowing for more informed confirmation with other technical indicators. according to conventional wisdom. An average that is correctly chosen will provide support far more often than it is broken. based on the concept that a stock generally trades within a predictable range on either side of the moving average. Bollinger Bands are considered some of the most useful bands in technical analysis. indicate a trend reversal. the bands are tapered for a narrower focus to the price range. when a stock is less volatile. followed by the same inside the bands. q q . but instead indicate whether the price is relatively high or low. then the average is too long. The upper band is the standard deviation multiplied by a given factor above the simple moving average. According to John Bollinger.com Education | Technical Indicators | Candlesticks | Chart Patterns Bollinger Bands Definition: Investors use trading bands. If indicators do not confirm this movement. respectively. then the average is too short. and fifty for long-term studies with 2. Bollinger Bands are typically drawn two standard deviations from a twenty day simple moving average for intermediate-term analysis. it can suggest a reversal. q When the price hits the upper or lower bands. Tops or bottoms made outside the bands. ten day for short term with 1. During periods of increased fluctuation. to isolate a range of prices for a given security. If. for the most accurate average "choose one that provides support to the correction of the first move up off a bottom. If the average is penetrated by the correction. the bands widen to take this into account. A move originating at one band tends to go to the other band. Bollinger also contends that: q Sharp moves tend to occur after the bands tighten to the average. and when the fluctuation decreases. lines drawn above and below the moving average. it is suggested to confirm with other indicators whether that price movement shows strength or weakness.

com Index | Previous | Next .turincon.http://todobolsa.

but accelerates upward (for long positions) or downward (for short positions) as the movement tops out.) Therefore. if the price rises above the SAR one may consider closing this short position. The formula is complex. but is described in great detail in Wilder's book. one may consider entering a long position (or bullish). Interpretation: If the price is above the reading for the SAR. Welles Wilder. Wilder suggests using this indicator in a trending (or directional) market. Therefore. then one mighty only take long positions. If the security is trending down. Index | Previous | Next . The SAR for each day is the exit point under this interpretation. if the price falls below the SAR one may consider closing this long position. New Concepts in Technical Trading Systems.com Education | Technical Indicators | Candlesticks | Chart Patterns Parabolic SAR Definition: Parabolic SAR was developed by J. one might only take short positions. The SAR for each day would be the exit point under this interpretation (or a possible entry point for a long position. If the security is trending up.turincon.http://todobolsa. one may consider entering a short position (pr bearish). If the price is below the reading for the SAR. Parabolic SAR is plotted around the price chart like a moving average or Bollinger Bands. It is designed to create exit points for both long and short positions in such a way that it allows for reactions or fluctuations at the beginning of the position.

it is a bullish signal. Specifically. it is a bearish signal. and look for divergences as the distinguishing factor. q When the CCI dips below -100. CCI is overbought and a price correction is forthcoming. with an optimal period being at least less than 1/3 the number of periods of the cycle. Interpretation: The Commodity Channel Index can be interpreted in several different ways. extending below -100. q When CCI crosses zero from positive to negative. the security is potentially oversold. To overcome this. designed to keep trades neutral in a sideways moving market. it is potentially a bullish signal. whereas is both are reaching new highs.com Education | Technical Indicators | Candlesticks | Chart Patterns Commodity Channel Index Definition: The value of the Commodity Channel Index (CCI) is not limited to commodities. A second interpretation is that when the CCI breaks into triple digits it will continue a trend. The reverse conditions can hold true when the price reaches new lows over a given period. A third interpretation is to integrate the two views. meaning that when CCI is in its upper ranges. An oscillator refers to a momentum or rate-of-change indicator that is usually valued from -1 to +1 or 0% to %100.http://todobolsa. and can be incorporated into many different types of trading schemes or philosophies depending on the type of security and the periods being analyzed. For instance. q When CCI crosses zero from negative to positive. it is potentially a bearish signal. if the price is breaking new highs. and identify entry points when a breakout occurs. Index | Previous | Next . q When the CCI rises above +100. extending beyond +100. then an uptrend will possibly ensure. as the CCI is not. Critics of the indicator say that CCI often misses the early part of the price movement. A high value means prices are relatively high and while a low value means the opposite. One interpretation is to use CCI as an overbought/oversold oscillator. The CCI is often best-suited for securities with cyclical patterns. this oscillator measures how high or low prices are relative to their statistical mean.turincon. a price rally is approaching. some traders use signals when the CCI crosses the zero. and was developed by Donald Lambert as a market timing tool. When CCI is well into its lower ranges.

Interpretation: There are several possible interpretations for the Relative Strength Index. could be more appropriately called the internal strength index. A second mode of interpretation is to look for support and resistance lines or common chart formations such as head and shoulders in the RSI itself. When the RSI crosses above 50 it can be considered bullish. for it compares the price of a security relative to itself. and sell signals are triggered when RSI is in overbought (70-80) area. the average closing price on the down days over a given period. Index | Previous | Next . An oscillator refers to a momentum or rate-of-change indicator that is usually valued from -1 to +1 or 0% to %100. RSI is measured in a period between 5 and 25. Generally. Wilder advocated a 14-day RSI. A third mode of interpretation is to recognize divergences in the RSI. such as when the price is moving up when the RSI is moving down or vice versa. and is plotted on a vertical scale of 0 to 100. any of which can be very powerful depending on the market conditions and trading/investment approach: One interpretation is that buy signals are triggered when RSI is in oversold (20-30) area.turincon. indicating potential reversals that the stock chart may not. Welles Wilder. an oscillator introduced by J. Jr. and when it crosses below 50 it can be considered bearish. potentially signaling a market top. A fourth mode of interpretation for the RSI is to view it as a bullish or bearish signal when it crosses 50. This can mean that the price is going to "correct" and move in the direction of the RSI. although shorter and longer periods have gained popularity when the market exhibits certain characteristics. The RSI is based upon the difference between the average of the closing price on up days vs..http://todobolsa. potentially meaning that the stock is about to reach its low for this trend.com Education | Technical Indicators | Candlesticks | Chart Patterns Relative Strength Index Definition: Relative Strength Index (RSI).

http://todobolsa. ADX should be rising 2.turincon.. The calculation of the DMI is fairly complex. When the +DI crosses below the -DI. the price of the security must rise above the high of the day that the +DI crossed above the -DI.com Education | Technical Indicators | Candlesticks | Chart Patterns Directional Moving Index Definition: The Directional Movement Index (DMI) is a trend-following indicator developed by J. According to conventional interpretation. the range of highs divided by the price range over the last day and previous close. For an uptrend to be valid. ADX: modified moving average of the difference of +DI and -DI divided by the sum of +DI and -DI. designed to determine whether a security is in a trending or non-trending market. the range of lows divided by the price range over the last day and previous close. smoothed over a given number of periods. For a downtrend to be valid. and consists of three lines: q +DI: current positive directional index. the price of the security must dip below the low of the day that the +DI crossed under the -DI. Welles Wilder. Confirmation from another indicator is encouraged pointing towards strong trending or volatility characteristics. A more strict interpretation of the Directional Moving Index calls for a fourth criterion to be met. smoothed over a given number of periods. Jr. this indicator is used to capture the period when the market shows significant trending or directional behavior. it can be considered a signal for a downtrend. q q Interpretation: When the +DI rises above the -DI. 1. ADX should be above 50 3. Index | Previous | Next . Since the market is in a strong trend only about 30% of the time and in sideways about 70% of the time. multiplied by 100. three criteria should be met for a signal to be considered valid in most circumstances. it can be considered a signal for an uptrend. -DI: current negative directional index.

IQ Chart and IQC. With a price range of ten to twenty. ten would be given a 0 designation. A third interpretation is that a buy signal is generated when either line dips below and then rises above 20. An oversold market occurs when the price makes a series of lower lows while %D makes a series of higher lows. The stochastics indicator is plotted as two lines. and the value of %D is the moving average of %K over a given number of periods. There are two types of stochastics: fast stochastics and slow stochastics. An oscillator refers to a momentum or rate-of-change indicator that is usually valued from -1 to +1 or 0% to %100. the value of %K slow is the %D-period moving average of the point at which the current price lies within the historical price range of its given period (or raw %K). prices tend to close near their high. . An overbought market occurs when %D makes a series of lower highs while the price makes a series of higher highs. which may be more beneficial when combined with other indicators that discern whether a market is in a trending or cyclical rotation mode. and during a downward trading market. When the %K line rises above the %D line it is considered bullish. A second interpretation is to receive signals based on a crossover of the two lines. and a bearish signal is generated when either line rises above and then dips below 80. fifteen would be at 50.COM use slow stochastics. When calculating fast stochastics. and the value of %D slow is the moving average of the %K slow over a given number of periods. %K and %D. Stochastics measures at what point the price of a security is within the entire price range of the security over a given period. which by being smoothed. and when the %K line falls below the %D line. One interpretation (and the one Dr. You can eliminate some false signals by using only the signals which correspond to the direction of the intermediate to long term trends. a popular and dynamic indicator developed by Dr.http://todobolsa. is based on the premise that during an upward trading market. Interpretation: There are several major interpretations for stochastics. prices tend to close near their low. tend to exhibit less market noise. George Lane. The values of the stochastics calculations are dependent on the parameters given to %K and %D. When calculating slow stochastics.turincon. Lane believes to be most important) is to look for a divergence between %D and the price. the raw value of %K is the point at which the current price lies within the historical price range of its given period.com Education | Technical Indicators | Candlesticks | Chart Patterns Stochastics Definition: The Stochastics oscillator. The range of the Stochastics is between 0 and 100. it is considered bearish. and a price of twenty would be at the 100th percentile.

Index | Previous | Next .http://todobolsa.turincon.com Many investors combine several of these interpretations as a major criterion used for making trading decisions.

Linear regression will work best when the period being studied is similar to the cycle length or typical trend length of the security in question.com Education | Technical Indicators | Candlesticks | Chart Patterns Linear Regression Definition: Linear regression is a statistical tool used for forecasting future price. and is the point at which "bulls" will not let the price fall below. It is calculated by using the "Least Squares" method over a given period. while divergences above the line indicate the market is potentially overbought. Conventionally.turincon. Interpretation: There are two conventional interpretations for the linear regression line. If the line is positive. it may suggest a buying opportunity. whereas a turn downwards suggests one may consider selling the stock. These lines can be used as support and resistance lines. consisting of two parallel lines at fixed distances above and below the linear regression line. for the market is oversold. The first interpretation is to use the linear regression as the overall trendline for that given period. Price divergences below the line indicate a possible buying opportunity. whereby the support line is the bottom line. Index | Previous | Next . which is drawn as a trendline extending through the defined period that attempts to filter out market noise.http://todobolsa. The concept behind linear regression is to find the best estimate of the trend given a noisy sample of data points. and the resistance line is the top line. a breakout above resistance or below support indicates that there is either a) some news about the company which justifies recreating the upper and lower trading limits or b) there is about to be a correction towards the range as trader's are hesitant about the stock's new value. A second interpretation is to construct a linear regression channel. Support and resistance lines are drawn as the upper and lower limits of a trading range. the point above which the "bears" will not let the price rise above. which are used to watch the battle between buyers and sellers.

and long term market cycles (7. should the value of the Ultimate Oscillator rise above seventy OR rise above fifty and then dip below forty-five. & 28-period). a bearish signal is generated. but can be very powerful in certain market climates and when verified with other indicators. Williams' Ultimate Oscillator. The subsequent downtrend can be ended. provided that the Oscillator falls below thirty during this divergence AND the Oscillator then rises above its high during the span of the divergence. provided that the Oscillator rises above fifty during this divergence AND the Oscillator then falls below its low during the span of the divergence. A first set of signals is generated when there is a divergence between price action and what is seen on the Ultimate Oscillator. 14.http://todobolsa. according to Williams' interpretation. according to William's interpretation. Interpretation: Williams' suggested interpretations must meet fairly rigorous criteria.com Education | Technical Indicators | Candlesticks | Chart Patterns Ultimate Oscillator Definition: Larry Williams developed the Ultimate Oscillator as a way to account for the problems experienced in most oscillators when used over different lengths of time. combines three oscillators which represent short. Index | Previous | Next . When the price reaches a higher high and is not supported by a higher high of the Ultimate Oscillator. It is expressed as a single line plotted on a vertical range valued between 0 and 100. An oscillator refers to a momentum or rate-of-change indicator that is usually valued from -1 to +1 or 0% to %100. intermediate. The subsequent uptrend can be ended. should the value of the Ultimate Oscillator rise above sixty-five OR fall below thirty. a bullish signal is generated. therefore.turincon. When the price reaches a lower low and is not supported by a lower low of the Ultimate Oscillator.

(The signal line is a moving average of the MACD line). we show the difference between the two moving averages (the MACD) plotted as green or blue vertical lines. One interpretation is that a positive MACD value is a bullish signal. a buy signal can be interpreted when the MACD rises above its signal line. A third popular method of interpretation is that when the MACD is making new highs or lows. it signals a possible trend reversal. Similarly. Index | Previous | Next .turincon. and a red signal line plotted over the MACD which is a moving average of the MACD line. it can be considered a sell signal. When the MACD falls below its signal line. This type of interpretation is often verified with an overbought/oversold oscillator. and is subject to several conventional interpretations which can all be useful depending on your trading and investment philosophies. and the price is not also making new highs and lows. The crossover interpretation posits that the signal line can be used alongside the MACD to determine the appropriate entry and exit point.http://todobolsa. Interpretation: The MACD can be a very helpful technical indicator.com Education | Technical Indicators | Candlesticks | Chart Patterns Moving Average Convergence/Divergence Definition: Moving Average Convergence and Divergence (MACD) is the difference between a fast exponential moving average (fast EMA) and a slow exponential moving average (slow EMA). and a negative MACD value is a bearish signal. In IQ Chart. The name was derived from the fact that the fast EMA is continually converging towards and diverging away from the slow EMA.

turincon.http://todobolsa. Interpretation: Volatility has several uses and potential interpretations. it can mean that the frequency and severity of short-term price swings will decrease as the overall trend establishes itself among investors. Index | Previous | Next . Second. and so on. Third. the degree of volatility of a particular security can be used to determine whether or not a stock should be considered for selection. Many stocks can have cycles with a high degree of regularity. recognizing cycles in volatility can be useful in determining appropriate times to anticipate a price breakout. First. This knowledge can be valuable for incorporating into trading and investment strategies in a number of ways. including the likelihood of a price change being a trend change. it can mean that there will be a change in trend. Low degrees of volatility can suggest that a stock will tend to stick to its underlying trend while high degrees of volatility can suggest that a stock will move greatly about its trend. when a stock tends to have a certain range of volatility over an extended period of time.com Education | Technical Indicators | Candlesticks | Chart Patterns Volatility Definition: Volatility is a measure of a stock's tendency to fluctuate over a range of prices during a set period of time. If it breaks out of the range downward. volatility can be used to calculate the theoretical option value. whether a stock is more appropriate for longer-term or shorter-term analysis. IQ Chart calculates volatility as the annualized standard deviation of the price fluctuation over a given period. Finally. how price movement is related to industry or market movement. and then breaks out of the range upward. Volatility's tendency to be autocorrelative (meaning that reversals often continue in the new direction) can help create circumstances to be a powerful leading indicator.

q When the indicator goes from negative to positive. The first interpretation is to use regions to derive bullish and bearish signals.turincon. On the other hand. If the Oscillator extends below -100 or above 100.com Education | Technical Indicators | Candlesticks | Chart Patterns McClellan Oscillator Definition: The McClellan Oscillator is a technical indicator based on the New York Stock Exchange. The second interpretation is to look at whether the Oscillator is positive or negative. Interpretation: Volatility has several uses and potential interpretations. If the McClellan Oscillator falls into the -70 to -100 region and turns up. not any one particular stock. Index | Previous | Next . meaning it is designed to determine the strength of a market trend. it represents extreme oversold/overbought conditions. and suggests a continuation of the current downtrend or uptrend for a short-to-intermediate period of time. There are two major sets of interpretations for the McClellan Oscillator. it can be considered bullish. a bearish signal is generated. a bullish signal is generated.http://todobolsa. The McClellan Oscillator is calculated by subtracting a 39-day exponential moving average of the difference between the advancing issues and the declining issues from a 19-day exponential moving average of the difference between the advancing issues and the number of the declining issues in the New York Stock Exchange. q When the indicator goes from positive to negative. rather than a small number of stocks making large gains or losses. it can be considered bearish. respectively. It is a short term and intermediate term "market breadth" indicator. This is based on the concept that a robust uptrend or downtrending market is characterized by a large number of stocks advancing or declining moderately. if it rises into the +70 to +100 region and turns down.

volume tends to be positively correlated with the direction of a trend. In a longer-term upward trend. This analysis can also be done on shorter and intermediate trends with certain characteristics.com Education | Technical Indicators | Candlesticks | Chart Patterns Volume Definition: Volume is the total number of shares of transacted during a specified period. volume can provide some very powerful clues to anticipate price behavior. Prolonged periods of lower volume can indicate high levels of uncertainty about the future direction of the price. If these characteristics are not exhibited. it can potentially signal the changing of the overall trend. there will tend to be higher volume as the price goes up and lower volume as the price goes down. Index | Previous | Next . often found in sustained sideways markets or market bottoms.turincon. there will tend to be higher volume as the price goes down and lower volume as the price goes up. Although this is a rather basic indicator. During sideways markets. During a longer-term downward trend. During trending markets. Interpretation: One interpretation for volume can be used to determine the strength of a trend.http://todobolsa. a higher level of volume can mean that the price will break out of that trading range. or confirm the movement of the price.

turincon. The opposite conditions can be interpreted when the indicator bottoms out and begins to rise. Interpretation: The conventional interpretation is to use momentum as a trend-following indicator. and a change might not be considered until the actual price begins to dip down or rise. To reduce the choppiness of the indicator. It is calculated by subtracting the price of x periods ago from the price now.com Education | Technical Indicators | Candlesticks | Chart Patterns Momentum (Rate-Of-Change/ROC) Definition: Momentum is a relatively straightforward indicator that measures the rate of change in price as opposed to price itself. This means that when the indicator peaks and begins to descend. Index | Previous | Next . respectively. a continuation of the current trend is likely. This indicator can also be referred to as rate-of-change (ROC).http://todobolsa. the value given in IQ Chart is a five-period exponential moving average of itself. it can be considered a sell signal. If momentum reaches very high or low values relative to its range historically.

the following should be noted when using this indicator.com Education | Technical Indicators | Candlesticks | Chart Patterns Williams %R Definition: The main concept of Williams' %R is "gravitation towards the mean." If within a given time period. so as to make its conventional signals in line with other common oscillators and indicators. Although %R has some tendencies to be a leading indicator (in other words. IQ Chart does not plot Williams' %R as negative numbers. although periods of ten and twenty are also commonly used. or sell in an overbought market until the price actually begins to turn downward. the price is near the high end of a period's range. and is vulnerable for a selloff. While Williams' %R is a very powerful indicator used by many market technicians. An oscillator refers to a momentum or rate-of-change indicator that is usually valued from -1 to +1 or 0% to %100. the security tends to be overbought. some suggest that one might not consider buying in an oversold market until the price actually begins to turn upwards. if the price is near the low end of a period's range a potential rally is could occur due to oversold market conditions. to bottom out or peak before the price does).http://todobolsa.turincon. Interpretation: If Williams' %R moves above 80. The optimal period for %R is the cycle length of the security. but on a scale of 0 to +100. it can be considered a signal of an overbought market. This suggests that %R should be confirmed with other indicators that may be able to distinguish between the two circumstances. it can be considered a signal of an oversold market. Conversely. When Williams' %R moves below 20. This is due to potentially prolonged overbought/oversold periods. Index | Previous | Next .

and long-term 100 to 250 days. the moving average can be compared to the price. and then divide that number by nine. a 50-day EMA will have a 3. A simple moving average is calculated by adding the prices over a given number of periods. and is calculated by applying a percentage of today's closing price to yesterday's moving average. It shows the average value of a security's price over time. the less total weight is applied to the most recent price. Both IQC. If the price rises above the moving average it can be considered a bullish signal. An exponential moving average gives more weight to recent prices. it can be considered a bearish signal.http://todobolsa. then dividing the sum by the number of periods.039 = 2/50 + 1 This means that the most recent day will be weighted 3. One thing to keep in mind is the shorter the time period. what is considered "market noise" or a "whipsaw". Moving averages can be calculated in a number of ways. Interpretation: There are two major ways moving averages are used.COM and IQ Chart use exponential moving averages.9% of the value of the EMA.9 % exponential average. a nine-day simple moving average would add together the closing prices for the last nine days. Formula: The formula for an exponential moving average is as follows: Exponential Percentage = 2/Time Period + 1 Therefore. a shorter period also means that you may have a greater number of false moves within an existing trend. A 10-day moving average is much more sensitive to moves than a 50-day moving average.turincon. However. First. and if the price dips below the moving average.com Education | Technical Indicators | Candlesticks | Chart Patterns Moving Average Definition: Moving Average (MA) is perhaps the oldest and the most widely used technical indicator. the more reactionary a moving average becomes. For example. each day has precisely a 2% weight. For a 50-day simple moving average. The longer the period of the exponential moving average. Moving averages are very flexible. Moving averages can be used to evaluate trends in both the short-term and long term. The advantage to an exponential average is its ability to pick up on price changes more quickly. . This "crossover" or "penetration" will not be at the top or . an intermediate-term from 25 to 100. A typical short term moving average ranges from 5 to 25 days. and can be incorporated into most trading and investment philosophies.

Index | Previous | Next . but normally shortly after the price bottoms out or tops out.turincon. Second.http://todobolsa. it can be considered a bullish signal. and generate signals when they cross. longer-term and shorter-term moving averages can be compared to each other. When a shorter term MA moves across a longer term MA and both slopes go down. When a shorter term MA moves across a longer term MA and both slopes go up.com bottom. it's can be considered a bearish signal.

In the Japanese candlestick. and a white body means the close is higher than the open. They can be merged with other technical tools to create a synergy of techniques. This style evolved into the candlestick technique currently used in Japan. one of the major elements is the body of the candlestick. they are called shadows. Candlestick charts are a useful stand alone tool.turincon. Others hint of a forceful price move. They give deep insight into the market conditions.com Education | Technical Indicators | Candlesticks | Chart Patterns What is a candlestick? Doji White Day Black Day More than 200 years ago. The difference between the open and close prices makes a box which we call real body. Index | Previous | Next . Usually there are extension lines come out from the ends of the real bodies.http://todobolsa. Certain Candlestick combinations may imply a period of consolidation. A black body means the close is lower than the open. the Japanese were using their own style of technical analysis in the rice market. Those lines represent the high and low prices for the trading days.

http://todobolsa.com Education | Technical Indicators | Candlesticks | Chart Patterns Long Days The Long Days indicate the great difference between the open price and the close price for a trading day. The shadow lines are much shorter than the real body. Index | Previous | Next .turincon.

Both the body and the shadow lines are very short. Index | Previous | Next .http://todobolsa.com Education | Technical Indicators | Candlesticks | Chart Patterns Short Days The Short Days indicate the small difference between the open price and the close price for a trading day.turincon.

turincon. Index | Previous | Next . It usually implies bearish continuation or bearish reversal. It usually becomes the first part of a bullish continuation or a bullish reversal pattern.http://todobolsa. A Black Marubozu is a long black body with no shadows.com Education | Technical Indicators | Candlesticks | Chart Patterns Marubozu Marubozu means there are no shadows from the bodies. A White Marubozu is a long white body with no shadows which indicates a bullish trend.

http://todobolsa. Index | Previous | Next .com Education | Technical Indicators | Candlesticks | Chart Patterns Spinning Tops The Spinning Tops have longer shadow than the real body. The pattern indicates the indecision between the bullish and bearish trends.turincon. The color of the real bodies are not very important.

com Education | Technical Indicators | Candlesticks | Chart Patterns Doji Doji lines are patterns with the same open and close price. high. There are four special types of Doji lines.turincon. It indicates indecision of traders. The Long-legged Doji has a long upper and lower shadows with the price in the middle of the range.http://todobolsa. The Dragonfly Doji has a long lower shadow and no upper shadow. Four Price Doji's all prices: open. low and close are the same for a trading day. Gravestone Doji line has a long upper shadow and no lower shadow. Index | Previous | Next . or very quiet market. It is a good indication of bullish trend reversal. It's a very unique line indicating the indecision of the traders. It is a good indication of bearish trend reversal.

A Rain Drop appears when a small body gaps BELOW the previous day's long body.http://todobolsa.turincon. Stars are part of more complicated candlestick patterns. especially the reversal patterns. Rain Drops are part of the more complicated patterns. especially the reversal patterns. Index | Previous | Next .com Education | Technical Indicators | Candlesticks | Chart Patterns Stars & Rain Drops A Star appears when a small body gaps ABOVE the previous day's long body.

Index | Previous | Next .com Education | Technical Indicators | Candlesticks | Chart Patterns Paper Umbrella The Paper Umbrella appears when a small body comes with a long lower shadow.http://todobolsa.turincon. The Paper Umbrella is a strong reversal sign.

Recognition Criteria: q The long lower shadow is about two to three times of the real body.turincon.) Index | Previous | Next . It is named because the market is hammering out a bottom. The color of the real body is not important. q q q Little or no upper shadow. (Confirmation is suggested. The real body is at the upper end of the trading range.http://todobolsa.com Education | Technical Indicators | Candlesticks | Chart Patterns Hammer Hammer is a potentailly bullish pattern which occurs during a downtrend.

) Index | Previous | Next . (Confirmation is suggested. The real body is at the upper end of the trading range. q q q Little or no upper shadow. It is named because it looks like a hanging man with dangling legs.turincon. Recognition Criteria: q A long lower shadow which is about two to three times of the real body. though a black body is more bearish than a white body.http://todobolsa.com Education | Technical Indicators | Candlesticks | Chart Patterns Hanging Man Hanging Man is a potentially bearish pattern which occurs during an uptrend. The color of the body is not important.

com Education | Technical Indicators | Candlesticks | Chart Patterns Engulfing Bullish Engulfing Bearish Engulfing Engulfing is a revesal pattern. (Confirmation is suggested. especially after a prolonged trend. Recognition Criteria: q The first day's color indicates the trend of the trading day. q q The second real body should have the opposite color of the first real body. The second day's body should completely engulf the previous day's body.turincon.http://todobolsa. It has a long body that totoally engulfs the prior day's body.) Index | Previous | Next .

Recognition Criteria: q A long body followed by a shot body with opposite color. (Confirmation is suggested.turincon. q q A short body is completely within the prior day's long body.http://todobolsa.) Index | Previous | Next .com Education | Technical Indicators | Candlesticks | Chart Patterns Harami Bullish Harami Bearish Harami The Harami pattern is the reverse of the Engulfing pattern. The color of the second candle ( the baby) is not important. The word harami in Japanese means pregnant or body within.

com Education | Technical Indicators | Candlesticks | Chart Patterns Harami Cross Bullish Harami Cross Bearish Harami Cross In Harami pattern. especially after a long body in a downtrend.http://todobolsa. q q The Doji is in the range of the previous long day. (Confirmation is suggested. The long day appears within A trending market.turincon. Recognition Criteria: q The second day's open and close are the same (Doji).) Index | Previous | Next . It is a important reversal sign. if the small candle is a doji. the pattern is refered as Harami Cross.

It indicates a possibility of the reversal of the downtrend. Occurs in a downtrend.) Index | Previous | Next .com Education | Technical Indicators | Candlesticks | Chart Patterns Inverted Hammer The Inverted Hammer is a pattern that occurs at the bottom of a downtrend.http://todobolsa. (Confirmation is suggested. q q The very long upper shadow. Recognition Criteria: q A small real body is near the lower part of the price range.turincon.

q q The small real body at the lower end of the price range. It occurs in an upper trend which indicates that the market opens at the lows of the season. The real body gaps away from the prior real body. (Confirmation is suggested.http://todobolsa. rallies and pulls back to the bottom.turincon. Recognition Criteria: q A very long upper shadow.) Index | Previous | Next .com Education | Technical Indicators | Candlesticks | Chart Patterns Shooting Star The Shooting Star is a bearish reversal pattern.

Occurs in a downtrend. (Confirmation is suggested. q q The white body pierces the midpoint of the prior white body.) Index | Previous | Next . Recognition Criteria: q A long black body followed by a white body.com Education | Technical Indicators | Candlesticks | Chart Patterns Piercing Line The Piercing Line is a bullish reversal pattern which is composed of a long black body followed by a white body.http://todobolsa. It tells that the market opens lower on the opening and closes above the midpoint of the prior body.turincon.

(Confirmation is suggested. Occurs in an uptrend. It is the opposite of the Piercing Line.turincon. It tells that the market opens above the prior day's high.) Index | Previous | Next .com Education | Technical Indicators | Candlesticks | Chart Patterns Dark Cloud Cover The Dark Cloud Cover is a bearish reversal pattern which is composed of a white body followed by a black body. q q The black body passes the midpoint of the prior white body. Recognition Criteria: q A white body followed by a black body. and closes below the midpoint of the prior white body.http://todobolsa.

) Index | Previous | Next . (Confirmation is suggested.http://todobolsa.com Education | Technical Indicators | Candlesticks | Chart Patterns Doji Star Bullish Doji Star Bearish Doji Star A Doji Star is a trend reversal pattern which is composed of a long black body followed by a doji(a pattern with the same opening and closing price). Recognition Criteria: q Long black day followed by a doji. q The doji gaps down from the prior black body.turincon.

It is named because it appears in the morning before the sun rises.turincon. (Confirmation is suggested.com Education | Technical Indicators | Candlesticks | Chart Patterns Morning Star The Morning Star is a reversal pattern which is composed of a long black body. The third day is a long white body that gaps up from the prior star.) Index | Previous | Next . The third candle is the confirmation of the reversal. Recognition Criteria: q The first day is a long black day. and a long white body. q q The second day is a star gaps away from the first day.http://todobolsa. a star gaps away from the black body.

The third day is a black body which opens lower and close much lower. with a small range. which makes the price gap higher on the open.) Index | Previous | Next . q q The second day gap higher from the first day. It's made of a long white body followed by a small body which gaps higher. Recognition Criteria: q The first day is a long white day.turincon.com Education | Technical Indicators | Candlesticks | Chart Patterns Evening Star The Evening Star is a bearish reversal pattern. The third day is a long black day and close below the midpoint of the first white day.http://todobolsa. (Confirmation is suggested.

following by a Doji Star.com Education | Technical Indicators | Candlesticks | Chart Patterns Morning Doji Star When a downtrend market is in place. Recognition Criteria: q The first day is a black day which indicates the trend of the market. Like the regular Morning Star. q q The second day must be a Doji day. It is more significant than the regular Morning Star pattern.http://todobolsa. The third day is a white day and supports the reversal of the trend.) Index | Previous | Next . the third day will support the reversal of the trend.turincon. (Confirmation is suggested.

turincon.http://todobolsa. q q The second day is a Doji day. The third day is black day which supports the reversal of the trend.com Education | Technical Indicators | Candlesticks | Chart Patterns Evening Doji Star An Evening Doji Star is when a Doji Star is in an uptrend followed by a long black body. It is more significant than the regular Evening Star pattern.) Index | Previous | Next . the third day will support the reversal of the trend. Recognition Criteria: q The first day is a white day which indicates the trend of the market. (Confirmation is suggested. Like the regular Evening Star.

It is almost the same as Morning Doji and Evening Doji Star. (Confirmation is suggested.com Education | Technical Indicators | Candlesticks | Chart Patterns Abandoned Baby Bullish Abandoned Baby Bearish Abandoned Baby Abandoned Baby pattern is similar to the family of Morning Star and Evening Star patterns. Recognition Criteria: q The first day shall indicates the prior trend. The difference is the shadows on the Doji must gap below the shadows of the first and third days for the Abandoned Baby bottom. The third day is the opposite color of the first day and gaps in the opposite direction.) Index | Previous | Next .http://todobolsa. q q q The second day is a Doji which gaps above or below the previous day's range. There is no shadows overlapping between the Doji and other two days.turincon.

Usually measured against the Dow Jones Industrial Average or the S&P 500. McDonalds and UAL against the Dow Jones Industrial Average from January. you can compare any index with up to four stocks at one time. In IQ Chart.turincon. while UAL under-performed the Dow. 1998.com Education | Technical Indicators | Candlesticks | Chart Patterns Alpha How a stock outperforms or underperforms the broader market. 1998 to June. This chart measures the performance of America Online. Index | Previous | Next . A window will pop-up. garnering a negative alpha. allowing you to input up to four symbols. America Online and McDonalds have positive alphas (with America Online being higher).http://todobolsa. You may do so by clicking on "Chart" >> "Compare with" >> "Other Company or Index".

com Education | Technical Indicators | Candlesticks | Chart Patterns Descending Trend Channel If connecting the price bottoms of a particular stock or index compose a downward sloping line parallel to a line connecting the tops of that stock or index. In this case. such as IQC Zone. All drawing functions in IQ Chart Version 3. You can choose up to four indicators at a time. by clicking on "Indicators" within IQ Chart.1. Our proprietary indicator.turincon. IQC Zone. Index | Previous | Next . the Descending Trend Channel is the area between the two lines. such as trendlines. are performed by clicking on "Toolbox". could confirm this penetration. An ascending trend channel is formed connecting the price tops and bottoms from April to July. It turned from green to red when the ascending trend channel was penetrated. and turned green again when the descending trend channel was penetrated. This is a daily chart of McDonald's Corporation.http://todobolsa. a descending trend channel is formed. from July to September. when the ascending channel is penetrated. to display above the chart.

You can choose up to four indicators at a time.1. All drawing functions in IQ Chart Version 3. such as trendlines.com Education | Technical Indicators | Candlesticks | Chart Patterns Ascending Trend Channel If connecting the price tops of a particular stock or index compose an upward-sloping line parallel to a line connecting the bottoms of that stock or index. there was a great deal of movement within that range.turincon. . are performed by clicking on "Toolbox". by clicking "Indicators" within IQ Chart. If a price penetrates the upper or lower trendlines. Although the price was moving upwards at a steady pace for this month. This ascending trend channel was drawn on a 60-minute chart of Applied Materials. Studying this movement can help provide buy and sell opportunities for the technical investor. Notice how volume increases as price reaches the bottom of the channel and the top of the channel. This could signal that there are supply and demand constraints within the trend channel. the Ascending Trend Channel is the area between the two lines. Each bar on the chart or vertical line of volume represents one 60-minute period of market activity for AMAT.http://todobolsa. it could signal a change in trend. such as volume. Trend channels most often appear in frequently traded stocks.

turincon.com Index | Previous | Next .http://todobolsa.

are performed by clicking on "Toolbox".turincon. Williams %R does also.1. The use of the Williams %R indicator in this case may support that evaluation. You can choose up to four indicators at a time.com Education | Technical Indicators | Candlesticks | Chart Patterns Ascending Trendline Is formed when the price bottoms of a particular stock or index form an upward-sloping line. The technical indicator Williams %R is displayed above the chart. the bottoms that meet the trendline could represent bottoms of intermediate-term trends. If the trendline is penetrated. and buying opportunities for SUNW. Index | Previous | Next . When the price reaches the trendline. In this upward trending stock.http://todobolsa. Over the course of three years. the weekly low had not dipped below the trendline. All drawing functions in IQ Chart Version 3. such as Williams %R. such as trendlines. and then begins to turn up. it may signal a trend change. by clicking "Indicators" within IQ Chart. a possible confirmation of the overall price movement. This ascending trendline is drawn on a weekly bar chart of Sun Microsystems. Notice how each low of Williams %R is higher than the last.

IQC Zone.com Education | Technical Indicators | Candlesticks | Chart Patterns Bar Chart A bar is a visual representation of price movement over a given period. by clicking "Indicators" within IQ Chart. The top and bottom of the vertical line are the high & low prices of the stock during that time period. The color of the bars correspond with IQ Chart's proprietary indicator.COM and IQ Chart's bar charts. You can choose up to four indicators at a time to display above the chart. such as 5-minute and 15-minute intervals. In IQC.http://todobolsa. each individual bar consists of a vertical line and a horizontal line extending to the right from a point on the vertical line. Bar charts can be displayed in historical daily. such as IQC Zone. This is a daily bar chart of America Online. The horizontal line is the closing price of the stock during that time period.turincon. weekly & monthly charts as well as intraday charts. Index | Previous | Next . A bar chart is a group of bars in chronological order.

You can choose up to four indicators at a time. are performed by clicking on "Toolbox". Index | Previous | Next .http://todobolsa. and shows up more often during tops. By late-November. possibly suggesting investor indecision as the diamond moves towards consolidation.com Education | Technical Indicators | Candlesticks | Chart Patterns Diamond An uncommon but recognizable reversal pattern that begins as a broadening formation and reverts to a symmetrical triangle after several swings to make a four-cornered pattern. the stock price penetrated the lower boundaries of the diamond. such as volume. by clicking on "Indicators" within IQ Chart. Notice the three technical indicators plotted above the chart. to display above the chart. and continued to decline over the next three weeks. such as trendlines. Normally occurs only in very active stocks. and changes to a symmetrical triangle in mid-October.turincon. all four corners have formed. The broadening formation begins in September. and displayed a diamond pattern in a daily chart for the last half of 1998. All drawing functions in IQ Chart Version 3.1. stochastics & CCI. Ultimately. All three show very little volatility. Dupont is a fairly active stock.

The reason is that beta works both ways. the price of IBM should be dip to 113.turincon. IBM's does also. the price of IBM will increase by more than 5%. The first thing to notice is that as the S&P 500 goes up. notice how the gap narrows. What makes this a positive beta over the time period is that the gap between the two prices widens as the S&P goes up. so does IBM's price during this time period. With a true beta. the greater a stock's beta. A positive beta indicates that with a 5% increase in the S&P 500.http://todobolsa. Below is an example of a negative beta for the given period. As the S&P 500 goes down. This is a daily chart of IBM.com Education | Technical Indicators | Candlesticks | Chart Patterns Beta The degree of sensitivity that a particular stock has to the broader market. if the price of the S&P 500 was to drop to its price level in late August. and shows a positive beta as compared to the S&P 500. A 5% drop in the price of the S&P 500 should produce a greater that 5% drop in the price of IBM. In late September as the prices go down. and vice versa. The greater a stock's price rises during market rallies and falls during market drops. its price level in late August. . If a stock tends to drop when the market rises. its beta will be negative.

and begins to drop and stagnate as the S&P 500 increases towards the end of the period shown. A window will pop-up. In IQ Chart.turincon. In this daily chart of Chevron (using the same period of time as in the IBM example).com With a negative beta. You may do so by clicking on "Chart" >> "Compare with" >> "Other Company or Index".http://todobolsa. the price of Chevron rises when the S&P 500 is essentially flat. allowing you to input up to four symbols. and vice versa. a climb in the price of an index should correlate with a drop in the price of the stock. You can also compare any stock or index with up to any four stocks or indexes at one time. Index | Previous | Next . you can compare a symbol with the S&P 500 or Dow Jones Industrial Average by clicking "Chart" >> "Compare with" >> "S&P 500".

All indicators gave signals several weeks before the major price increase.com Education | Technical Indicators | Candlesticks | Chart Patterns Dormant Bottom Occurs with low-volume stocks with few shares outstanding during an active rising broader market. You can choose up to four indicators at a time. the stock price shoots upward. momentum and relative strength . and relative strength ranking crossed above 89 on the same day. In late October. there is a flurry of activity. rising broader market. and could have signaled the events to follow. This daily chart of Greg Manning Auctions had all of the potential signs to be a dormant bottom. possibly suggesting that some savvy investors were getting into the market when shares became available in the previous months. where for an extended period of time (weeks or months) there is very little movement in price or volume. momentum crossed above zero.http://todobolsa. When this reaches a critical mass. Eventually. Very little activity during an active. But how could one anticipate such a move upward? All of the technical indicators plotted above the chart suggested an upward movement was possible. and prices advance sharply.turincon. The theory is that savvy investors pick up small lots when they come up as opposed to running up the price by bidding on the stock. Volume also picked up on that day. such as volume. This pattern is a type of Rounded Bottom.

..com ranking. Index | Previous | Next . by clicking on "Indicators" within IQ Chart.turincon. The Pointer.http://todobolsa. to display above the chart.

In addition.http://todobolsa. All drawing functions in IQ Chart Version 3.com Education | Technical Indicators | Candlesticks | Chart Patterns Broadening Formation Could be referred to as inverted triangle patterns. such as IQC Zone and MACD. the tops and bottoms of MACD (the top indicator) could confirm the change in price direction. by clicking "Indicators" within IQ Chart.1. In this case. as they are formations which start with narrow fluctuations. The broadening formation is shown by two diverging trendlines and has continued over an eight month time period. Recognizing this formation and using technical analysis can present buy and sell opportunities. and its signals correspond with the bar colors on the chart. Index | Previous | Next . such as trendlines. MACD crossing zero could confirm the current direction. IQC Zone could confirm the swings between the top and bottom of this formation. are performed by clicking on "Toolbox". and then widen with diverging boundary lines. You can choose up to four indicators at a time.turincon. IQC Zone is the second indicator from the top. This is a daily chart of American Eagle Outfitters.

between August and October of 1998. and the reversal is confirmed when second rally crosses the peak of the first rally. This double bottom occurred for MCI Worldcom. as it turned from red to blue on October 16th. and a second bottom at least a month after the first within three percent in terms of price. subsequently followed by a second bottom (within three percent of the first) on lower volume.turincon. 1999. Inc. You can choose up to four indicators at a time.com Education | Technical Indicators | Candlesticks | Chart Patterns Double Bottom A reversal pattern whereby a bottom is formed on high volume. high volume (including the three highest volume days in the duration of the chart). This example meets all of the technical requirements for a double bottom. By using the "Pointer" in IQ Chart. and is nearly $80 as of January. the stock started a major uptrend. followed by a rally of at least fifteen percent. IQC Zone. with %K recently crossing over %D. including a rally of at least fifteen percent between the two bottoms. by clicking on "Indicators" within IQ Chart. Bottoms should be at least a month apart.http://todobolsa. a proprietary indicator found only in IQ Chart might have confirmed the breakout of the double-bottom. volume and stochastics. After the price penetrated the first peak. such as IQC Zone. Stochastics were also rising at the time. you can isolate a specific period. to display above the chart. and the price and technical information from that period .

1 are performed by clicking "Toolbox". All drawing and pointing function in IQ Chart 3. Index | Previous | Next .com will be displayed on the bottom of the screen.turincon.http://todobolsa.

a horizontal line will represent the body. Index | Previous | Next . whereby the bottom of the body is the open and the top of the body is the close. whereby the top of body is the open price and the bottom of the body is the close. If the stock price did not change. the stock price has gone up during that time period. Shown above the candlestick charts are the technical indicators Stochastics and Directional Moving Index.turincon. The "tails". This is a daily candlestick chart of IBM. You can choose up to four indicators at a time to display above the chart by clicking "Indicators" within IQ Chart. If the body is filled in (blue).http://todobolsa. extending from the body indicate the high and low prices during that time period. A candlestick has two parts. If the body is not filled in (white).com Education | Technical Indicators | Candlesticks | Chart Patterns Candlestick Chart A candlestick is a visual representation of price movement during a given period. the stock price has gone down during that time period. weekly & monthly charts as well as intraday charts. the "body" and the "tails". or vertical lines. such as 5-minute and 15-minute intervals. Candlestick charts can be displayed in historical daily. A candlestick chart is a group of candlesticks in chronological order.

This is a weekly chart of Adobe Systems where directly following the double-top pattern was a fifty percent drop in price over the next four months. It meets the technical specifications of a double-top pattern. by clicking on "Indicators" within IQ Chart. subsequently followed by a second top (within three percent of the first) on lower volume. Tops should be at least a month apart.1 are performed by clicking "Toolbox". All drawing and pointing function in IQ Chart 3.http://todobolsa. By using the "Pointer" in IQ Chart. and the reversal is confirmed when the second correction crosses the valley of the first correction. including a second top formed several months after the first at a slightly lower price on volume (5 million) that was substantially less than the volume on the first top. followed by a correction of at least fifteen percent. to display above the chart. you can isolate a specific period. such as volume.com Education | Technical Indicators | Candlesticks | Chart Patterns Double Top A reversal pattern whereby a top is formed on high volume. The valley between the tops formed after a greater than fifteen percent drop in price.turincon. Index | Previous | Next . You can choose up to four indicators at a time. and the price and technical information from that period will be displayed on the bottom of the screen.

which is normally between 50. The volume.000 to 100. or extended period of stagnation. Index | Previous | Next .turincon.http://todobolsa. correction. the price returns to one and a quarter. often indicating a last gasp of the trend. followed by a reversal. you can isolate a specific period. However. within a day or two.000 increases to almost 400. This 60-minute chart of Rada Electronics is an example of a climactic top. By using the "Pointer" in IQ Chart. Following on the heels of a possible uptrend. increasing approximately 40%. a sharp advance accompanied by volume much higher than normal during a rally. and the price and technical information from that period will be displayed on the bottom of the screen.000 shares an hour.com Education | Technical Indicators | Candlesticks | Chart Patterns Climactic Top During an uptrend. the price explodes.

q q . Right Shoulder: A third rally on noticeably less volume that fails to reach the top of the head. Neckline: A decline in prices from the top of the right shoulder which falls below the line formed when connecting the bottoms of the left shoulder and head by at least 2-3% of the stock's market value.http://todobolsa.turincon.com Education | Technical Indicators | Candlesticks | Chart Patterns Head and Shoulders A major reversal pattern with four distinct features: q Left Shoulder: A high volume rally and top followed by a minor reaction with significantly less volume than during the rise and top. followed by a another reaction on less volume that takes the price to a level near the bottom of the previous reaction. q Head: Another high volume rally with the top reaching a higher level than the left shoulder.

Descending trendlines in both volume and money flow could have suggested that the bears were beginning to overtake the bulls as less money began to flow into the security as had previously been the case. the price dropped by more than fifty percent from its high in July to November. The overall price movement could have been confirmed by both the technical descriptions of price and volume in the definition.http://todobolsa. You can choose up to four indicators at a time. are performed by clicking on "Toolbox".1. All drawing functions in IQ Chart Version 3.turincon. such as volume and money flow. This example meets all of the requirements of the pattern as described in the definition. by clicking on "Indicators" within IQ Chart. such as trendlines. to display above the chart. Index | Previous | Next .com After this head-and-shoulders pattern formed in a daily chart of 3COM Corporation in 1997. and the trendlines drawn on each.

and the price and technical information from that period will be displayed on the bottom of the screen.turincon. Index | Previous | Next . a downward gap and an upward gap occur. In the last five days shown. And for the gap down that occurred on the first trading day of October? Followers of this stock know that this gap was also closed several weeks later! (This example is not illustrative of all gaps. This daily candlestick charts shows several examples of Microsoft's stock closing the gaps created. only to close within a day's time.com Education | Technical Indicators | Candlesticks | Chart Patterns Closing the Gap When a stock "fills in" or retraces the range of a recent gap. you can isolate a specific period. Gaps do not necessarily close.) By using the "Pointer" in IQ Chart.http://todobolsa.

http://todobolsa.turincon.com

Education | Technical Indicators | Candlesticks | Chart Patterns Horizontal Trend Channel If connecting the price tops of a particular stock or index compose a horizontal line parallel to a line connecting the bottoms of that stock or index, the Horizontal Trend Channel is the area between the two lines.

The daily stock prices of Sun Microsystems formed a horizontal trend channel in the latter half of 1998. The significant event is when the price ultimately breaks the upper line of the channel, and the stock price goes up twenty points over the next three weeks, and has continued an uptrend to almost $110 in late January, 1999. IQC Zone, a proprietary indicator found only in IQ Chart, helps to identify entry and exit points in the example. You can choose up to four indicators at a time, such as IQC Zone, to display above the chart, by clicking on "Indicators" within IQ Chart. All drawing functions in IQ Chart Version 3.1, such as trendlines, are performed by clicking on "Toolbox". Index | Previous | Next

http://todobolsa.turincon.com

Education | Technical Indicators | Candlesticks | Chart Patterns

Linear/Logarithmic Scale Linear Scale: A scale where distances on the vertical axis represent equal net changes. Logarithmic Scale: A scale where distances on the vertical axis represent equal percentage changes.

The linear scale in the weekly chart of Microsoft (above) makes the price advances over the past five years look rounded, with nearly all of the gain occurring in the last two years. The logarithmic scale of the same time period (below) shows a well-defined trend. In this case, scaling by equal percentage changes on the vertical axis creates a clearer picture of growth over time.

http://todobolsa.turincon.com

In IQ Chart, you can change between linear and logarithmic scales by clicking on "Utilities" >> "Chart Properties". You can choose up to four indicators at a time, such as volume and on balance volume, to display above the chart, by clicking on "Indicators" within IQ Chart. Index | Previous | Next

http://todobolsa.turincon.com

Education | Technical Indicators | Candlesticks | Chart Patterns Cup and Handle Normally found as a correction pattern after a sustained upward price movement. Can last two to fifteen months, depending on the length of the initial upward movement. Pattern begins with the cup, in which the highs and lows when connected are in the shape of a "U". The handle has a downward tendency from the "U". The second top in the "U" should be slightly lower than the first top.

This daily chart shows Apple Computer, Inc. from January-September, 1994. It displays a cup-and-handle formation. It fits the criteria of such a pattern by exhibiting a "U" shape over a period of about six months, where the second high of the cup is lower than the initial high of the cup. This is illustrated by the trendline connecting the two tops. The handle of the cup directly precedes the first top. Notice the MACD, or Moving Average Convergence/Divergence, that is plotted above the chart. In this time frame, the crossing of the signal line and histogram above or below zero could have been a signal for upcoming price movement. When they dip below zero in mid-March, the stock price is about to decline for the next three months or so until the MACD crosses above zero, directly before the upswing in price. Finally, when the MACD dips below zero again in mid-September, the stock price is to move away from its previous high. (The relationship between MACD and price in this example is not necessarily representative of all situations or

com circumstances. click on "Time" >> "Date Range" and select the time frame to be viewed.http://todobolsa. you can view historical daily. weekly or monthly charts back to 1968.) In IQ Chart. such as trendlines. by clicking on "Indicators" within IQ Chart. such as MACD. All drawing functions in IQ Chart Version 3. to display above the chart. are performed by clicking on "Toolbox". To do so. Index | Previous | Next .1. You can choose up to four indicators at a time.turincon.

it would meet the horizontal line. In other words. and the other is diverging from the horizontal line. if the latter line were extended to the left. The cyclical pattern of the stochastics oscillator. This ascending right-angled broadening triangle was formed on a 60-minute chart of Rada Electronics.com Education | Technical Indicators | Candlesticks | Chart Patterns Right-Angled Broadening Triangle An inverted triangle pattern where one of the boundary lines is horizontal. plotted above the chart. While a line connecting the bottoms is flat.http://todobolsa. connecting the tops can be performed with an ascending trendline. could confirm the substance of the area pattern. .turincon.

1999.com This daily chart of Microsoft exhibits a descending right-angled broadening triangle.http://todobolsa. to display above the chart. such as stochastics and CCI. In this case.1. or CCI. Index | Previous | Next . by clicking on "Indicators" within IQ Chart. are performed by clicking on "Toolbox". and has continued its upward movement to nearly $175 as of January.turincon. Breaking out of the patterned occurred when the stock price broke above the $115 mark in mid-November. such as trendlines. which broke above +100 for the first time since before the beginning of the pattern in early July. All drawing functions in IQ Chart Version 3. the upward penetration was confirmed by the Commodity Channel Index. You can choose up to four indicators at a time. as the price tops between August and early November can be connected by a horizontal line while connecting the bottoms can be achieved with a descending trendline.

com Education | Technical Indicators | Candlesticks | Chart Patterns Cycle One complete up and down movement. by clicking on "Indicators" within IQ Chart. You can choose up to four indicators at a time. The vertical line intersects a price bottom. which represents the end of one cycle (from early-1996 to mid-1996). All drawing functions in IQ Chart Version 3. With respect to technical analysis.turincon.http://todobolsa.1. such as stochastics. This is a weekly chart of IBM. the pattern or amount of time comprising one up and down movement. such as trendlines. Index | Previous | Next . The stochastics oscillator is plotted above the chart. and the beginning of another ( from mid-1996 to spring-1997). are performed by clicking on "Toolbox". to display above the chart. and could confirm the cycles by forming tops and bottoms when price does.

com Education | Technical Indicators | Candlesticks | Chart Patterns Confirmation/Divergence Confirmation: Verifying a price movement with a technical indicator. For instance. This is a daily chart of the NASDAQ Composite Index. stochastics was at the level illustrated by the horizontal line.http://todobolsa. a sentiment that some investors felt towards technology stocks during the spring of 1998.turincon. This divergence could have suggested that the price movement may not be able to sustain itself. there failed to be new highs in the stochastics. as price was moving upwards. . and shows examples of both divergence and confirmation. When the stock made new highs in March and April. Divergence: When a new price or indicator high or low is not verified by a comparable technical indicator. a stock price reaches a new high. it would be considered a confirmation if a price oscillator such as RSI also reaches a new high at the same time in that period. it could mean that the market was overbought. According to conventional interpretations of the stochastics indicator. In February of 1998. Overlaid on the chart are two moving averages and plotted above the chart is the stochastics oscillator. if within a given period.

Index | Previous | Next . with both slopes turning downward.com The downward movement in May and June could have been confirmed by the short-term moving average crossing below the longer-term moving average.turincon. All drawing functions in IQ Chart Version 3. you can use vertical and horizontal lines to assist in the technical analysis of stock charts. In IQ Chart.http://todobolsa.1 are performed by clicking on "Toolbox".