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Lesson 15 - Exponential Moving Averages ( EMA)

Exponential Moving Average (EMA)

While simple moving averages are extremely useful, have the disadvantage of being highly susceptible to events extraordinary. For example:

Day 1: 1.4545
Day 2: 1.4550
Day 3: 1.4560
Day 4: 1.4565
Day 5: 1.4570

The result of the last 5 days - all rising - using simple moving average is 1.4558.

If we change the day 2 by the number 1.4500, because that day happened just a single event (eg a negative economic news because of an accident) the moving average would be affected. Then, to "filter" these unique events is used the Exponential Moving Average (EMA).

exponential moving averages give more prominence to the recent periods or days. In our example, the exponential moving average will continue to gain the values \u200b\u200bof 3 to 5.

The following figure shows the differences between a simple moving average and the other exponential.



Finally, we make a table of advantages and disadvantages simple moving average and exponential moving average:

	Simple Moving Average	Exponential Moving Average
Advantages	Your graph is smoother, and avoid giving false signals	trend changes as Confirmation of these are detected earlier
Disadvantages	Slow, which may delay the delivery of signals turnaround	Mayor possibility of reversal signals wrong.

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Lesson 14 - Moving Average (SMA)

A moving average is a simple way to soften the price over time. Moving averages are the sum of the closing prices of a currency "x" divided by the number of periods.

Like any indicator, the moving average is useful to predict future prices. Only by observing the behavior of the moving average graph one can predict the trend.

There are several types of moving averages, and generally a greater period of time will smooth the curve of the graph.

simple moving average (SMA).

A simple moving average is based on an "x" number of periods. Ex: They take the last 10 days of closing, then summed and divided by 10, and gives us an average. Then we do same two wings 11 to 1 days and divide by 10 having the above. Then from 12 to week 2 ...

Most softwares do the math, but it is important to understand the concepts behind each indicator.

The following chart shows different types of moving averages and how smooth the curve.

The red line is 10 times
yellow line 30 times
blue line 50 periods

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Lesson 13 - Fibonacci Expansion

Fibonacci Expansion

Fibonacci expansion is used for resistance expected according to a tenderncia. In other words, determine the rehash "stations" or "target prices" which will follow a trend confirmed price.

The Fibonacci expansion consists of two straight 3-point (make an example bullish). A minimum, then a maximum, a withdrawal of the uptrend to a new low. Then extrapolate the possible resistance or price targets given by the following Fibonacci numbers (three numbers are the most used): 61.8 - 100 to 161.8.

The following example shows a clear example of a Fibonacci expansion objectives by identifying 3 prices.


Generally

Fibonacci expansions are several temporary resistance, and we emphasize that the main problem is to draw, since it is difficult to determine which minimum should be used: Some recommend at least last the child and other minimum of the last 30 days .

Finally, we can say that the Fibonacci expansions are far from accurate, but can become a very useful guide to predict possible resistance to the trend tundra.

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Lesson 12 - Fibonacci Fibonacci retracement

numbers or the Fibonacci series is used in various fields, and a technical analysis without considering Fibonacci always highly contested.

Leonardo Fibonacci was a famous Italian mathematician and inventor of a series of numbers bearing the same name. This series is the sum of the two preceding numbers are as follows:

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233 ....

As the number increases the ratio between a number given above and the following: 0.618 and back gives the number 1.618.

55 / 89 = 0.618 89 / 55 = 1.618
89 / 144 = 0.618 144 / 89 = 1.618
144 / 233 = 0.618 233 / 144 = 1.618

And if you do the division between two different numbers gives us:

0.382 34/144 = 0.382
89/233 = 0.382

Fibonacci numbers have been used extensively in the financial world, for our case study only Retracting the Fibonacci numbers and those of Explansión.

Retracting Fibonacci (Fibonacci Retracement)

The numbers in this series are as follows: 0, 0.236, 0.382, 0.500, 0.618, 0.764 and 1.

The Fibonacci Folding is used to determine support and resistance. And the way they are calculated is by determining the maximum and minimum.

Minimum: The lowest point on a curve with at least Minimum two (one left and one on the right) of greater value.

Maximum: The major point on a curve with at least two peaks (one left and one right) of lesser value.

The following example illustrates the use of Fibonacci Replicating on a uptrend, to determine support and resistance:




You have to remember that not always work, but is a guide, rather a suggestion in price levels or areas that should pay attention ... something like train stations.

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Lesson 11 - Channels

Channels
Following the theory of trends in a more advanced level, if we draw a trend line on another parallel line above it (or under it) we have something called "channel."

To create an ascending channel, simply draw a parallel line joining the maximum. In other words, the maxima and minima are connected by two parallel lines. Just as a descending trendline united by their maximum, minimum uniting with another line we have a downstream channel.

The usefulness of the channels is important, as always the price line should bounce between the lines, giving buy signals and sale.

Note that there are several types of figures that behave much like the channels that are the cones, flags and triangles that we will see later.

The following figure shows an example of a downstream channel is exceeded, generating a change in trend. As always, we recommend channels to draw the line chart.

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Lesson 10 -

lines upward and downward

The trend lines are the most common form in technical analysis and can say they are the most underrated and underutilized also .

If they are drawn correctly can be extremely precise, but often this does not happen because they try to set "artificially" the results agree with the position taken.

In its basic form, an uptrend is drawn from the union of minimum are increasingly high, identifying an oblique support area. If it is a downward trend line is drawn connecting the peaks identifying the area of \u200b\u200bresistance. We always advise

draw trend lines sobe a line chart, because it takes only logoff prices and also deliver greater convenience for its realization.

The figure below shows an example of a trend.




... and tendency to break down and creating a new trend

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Trendlines Lesson 9 - Support and Resistance

Support and Resistance

The support and resistance are a of the concepts used in stock trading, forex and any type of financial operations. Is a very intuitive, however, most people think that the support and resistance are a line or a price determined when an area or price level:

Area Support identifies a price lower than that seen in strong demand, resulting in an arrest the downward movement. Is that level which compensates for the demand and supply, resulting in a rebound to higher prices.


Resistance Area, similarly, identify the price level that can see a strong supply and produces an upward motion detection. Also here is balanced between supply and demand, producing a negative response by reducing prices.



Otherwise we can imagine the support and resistance as steps a ladder, after reaching a certain level we have to go to the other, just-in-law is low.

One of the most important concepts of support and resistance is its dual capacity, ie, when a resistance is overcome automatically becomes a support and yet, when a support is exceeded passes automatically become resistance.

The following chart shows the path of resistance in support (never forget that are areas of price and not a single line).

Force on Support and Resistance

Force or tenacity to resist being overtaken in a support or resistance area is a question that can not be determined, and when the price comes close to these areas may or may not surpass the "million dollar question." But there are some indications that lead us to believe in the ability of toughness of a given area to another and is given by the number of times the price has rebounded. That is, a resistance level tested with several attempts to be outdone and always has been a rebound means a point of very strong resistance or support, while, when the resistance or support is tested a couple of times, can be considered weak. This is consistent with the number of times has been overcome.

The following example shows that the higher resistance (red) is stronger than the lower (blue) because the latter has been passed a time, while the former (red) or a single time.





We must add, that while not a law, it must take into consideration is that the stronger the resistance is overcome (run the same for the media) the greater the increase ( or drop in for support) ... "The bigger, heavier fall ..."