Webinar – 4

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Content

 Moving Average
 RSI
 VWAP
 ADX, DMI
 Pivot Points
 Fibonacci
 Super Trend
 Ichimoku
Exponential Moving Average
 The exponential moving average (EMA) differs from a simple moving average
(SMA) in two primary ways: more weight is given to the most recent data and
the EMA reacts faster to recent price changes than the SMA.
 A trader enters buy orders when the short-term EMA crosses above the long-
term EMA or enters sell orders when the short-term EMA crosses below the
long-term EMA.
 The most commonly used EMAs by traders are the 20, 50, 100, and 200.
 Many people use fibo number as EMA like 5, 8, 13, 21, 34, 55, 89, 144, 233
 There are three type of trading strategy by use of EMA- Crossover, Candle
closing and EMA direction reversal
Relative Strength Index (RSI)
 The RSI measures the ratio of up-moves to down-moves, and normalizes the
calculation so that the index is expressed in a range of 0-100. If the RSI is 70
or greater, the instrument is assumed to be overbought (a situation whereby
prices have risen more than market expectations). An RSI of 30 or less is taken
as a signal that the instrument may be oversold (a situation in which prices
have fallen more than the market expectations).
 We have many strategy to trade with help of RSI
1. Over bought and over sold zone.
2. Divergence
3. Momentum trading
4. 5-14 crossover
5. RSI trendline
Volume weighted average price (VWAP)
 The VWAP identifies the true average price of a stock by factoring the volume
of transactions at a specific price point and not based on the closing price.
 Price hovering below VWAP may indicate that a security is “cheap” or “of
value” on an intraday basis.
 Price reversal traders can also use moving VWAP.
 After studying the VWAP, I have identified two setups: pullbacks and breakout
1. Pullback- A pullback trade is generated whenever the price candles test the
VWAP in any trend.
2. Breakout- whenever price candle give breakout above or below VWAP.
ADX and DMI

 ADX is used to quantify trend strength. ADX calculations are based on a moving
average of price range expansion over a given period of time. The default setting is 14
bars.
 ADX is plotted as a single line with values ranging from a low of zero to a high of 100.
ADX is non-directional; it registers trend strength whether price is trending up or
down.
 Directional Movement shows whether the downside or upside movement is stronger,
and ADX shows the strength of that movement. An ADX reading above 25 signals a
strong trend
 +DI and -DI show up as two separate lines, colored green and red, respectively. When
the red line is above the green line, it means the price is dropping. When the green
line is above the red line, it means the price is rising.
 If the -DI and +DI are crisscrossing back and forth, there likely isn't a price trend going
on, and the price is moving sideways.
Pivot Points
 Pivot points calculation based on the high, low, and closing prices of previous
trading sessions, and they're used to predict support and resistance levels in
the current or upcoming session. These support and resistance levels can be
used by traders to determine entry and exit points, both for stop-
losses and profit taking.

 There are many kind of trading setup in pivot points, but very popular are –
1. Support resistance pullback trade
2. Breakout trade
3. Price rejection trade
4. OHLC trade
Fibonacci
 In the Fibonacci sequence of numbers, after 0 and 1, each number is the sum of
the two prior numbers. Hence, the sequence is as follows: 0, 1, 1, 2, 3, 5, 8,
13, 21, 34, 55, 89, 144, 233, 377, 610 and so on, extending to infinity. Each
number is approximately 1.618 times greater than the preceding number. This
figure – 1.618 – is called Phi or the Golden Ratio. The inverse of 1.618 is 0.618.
The Golden Ratio mysteriously appears frequently in the natural world.
 Fibonacci retracement levels are depicted by taking high and low points on a
chart and marking the key Fibonacci ratios of 23.6%, 38.2%, and 61.8%
horizontally to produce a grid. These horizontal lines are used to identify
possible price reversal points.
 The 61.8 percent retracement can be referred to as the golden retracement. It
is, after all, based on the Golden Ratio.
 While Fibonacci retracement levels can be used to forecast potential areas
of support or resistance where traders can enter the market in hopes of
catching the resumption of an initial trend, Fibonacci extensions can
complement this strategy by giving traders Fibonacci-based profit targets.
Super Trend
 It is a very simple indicator and is constructed with the help of just two
parameters- period and multiplier.
 When we construct Supertrend indicator strategy, the default parameters are
10 for Average True Range (ATR) and 3 for its multiplier. The average true
range (ATR) plays a key role in ‘Supertrend’ as the indicator uses ATR to
compute its value and it signals the degree of price volatility
 Super Trend being a trending indicator works beautifully in trending markets
(both uptrends and downtrends).
 A buy signal is generated when the Super Trend closes below the price and the
color changes to green. On the other hand, a sell signal is made when the
Super Trend closes above the price and the color of Super Trend turns red.
 Super trend works as Support/Resistance and also works as trailing stop loss
Ichimoku
 The Ichimoku Hinko Hyo is a momentum indicator used to recognize the direction of the
trend. It can also define accurate support and resistance levels. The Ichimoku Cloud
indicator consists of five main components that provide you with reliable trade signals:
 Tenkan-Sen line, also called the Conversion Line, represents the midpoint of the last 9
candlesticks. It’s calculated with the following Ichimoku formula: [(9-period high + 9-period
low)/2].
 Kijun-Sen line, also called the Base Line, represents the midpoint of the last 26
candlesticks. It’s calculated with the following formula: [(26-period high + 26-period
low)/2].
 Chiou Span, also called the Lagging Span, lags behind the price (as the name suggests). The
Lagging Span is plotted 26 periods back.
 Senkou Span A, also called the Leading Span A, represents one of the two Cloud boundaries
and it’s the midpoint between the Conversion Line and the Base Line: [(Conversion Line +
Base Line)/2]. This value is plotted 26 periods into the future and it’s the faster Cloud
boundary.
 Senkou Span B, or the Leading Span B, represents the second Cloud boundaries and it’s the
midpoint of the last 52 price bars: [(52-period high + 52-period low)/2]. This value is plotted
52 periods into the future and it’s the slower Cloud boundary.
Thank you
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