Arcatrades | Technical analysis
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Technical analysis

Technical analysis is an important tool for forecasting the market that helps traders analyse the current situation on the chart with the help of economic indicators that you can find on our platform.

A technical trader determines the mood in the market, predicting the direction of the following objectives:

1. Evaluation of the current price dynamics, that is, the determination of the trend. Here the following options are possible:

Increasing trend (bullish)

The down trend (bearish)

Fleet (flat, range, corridor, accumulation / distribution)

2. Estimate the time frame for the current trend:

Short-term trend (short)

Long-term trend (Long)

3. Evaluation of the amplitude of price changes in the current direction:

Weak impulse

Strong impulse

Indicators

Moving Averages

The moving average of the price is the average value of the price of the currency for a certain period of time (minute, hour, day, etc.) during the observation period, divided into these segments, determined sequentially for each next segment, starting with the first.

 

The moving average is more smoothed compared to the currency price chart by excluding the statistical noise inherent in each unit of time, and thereby facilitates visual observation of currency activity.

 

The moving average is used as a separate indicator or serves to create an oscillator. Moving average charts are usually based on closing prices, although moving averages can be calculated for the average for the trading period of the price or for average values of high, low, and closing prices.

 

Moving average charts are constructed in a common coordinate system with a price chart.

There are 3 types of moving averages:
1. Simple, or arithmetic moving average. (MSS)
2. Linearly smoothed (weighted) moving average. (LSS)
3.Expensively smoothed (weighted) moving average (EPS)

To build moving averages in the trading terminal, you need to go to the “Indicators” section to select “Moving Averages” and set the indicator parameters.

Bollinger Bands

This indicator is designed to determine high or low volatility. It is constructed by calculating a double standard deviation from the moving average (MSS) value for 20 trading periods and putting the relevant points up and down from the MSS schedule.

 

The strip formed by the bands is an expanding (with high volatility) and tapering (with low volatility) channel. Strong narrowing is a sign of low volatility in the short-term. An additional signal is the formation by the price chart of figures << Double peak >>. When the above upper band appears, the figure is a sell signal, below the bottom tape is a signal to buy the asset.

Relative Strength Index

The RSI indicator measures the relative change in the highest and lowest closing prices.
The formula for calculating RSI is denoted by:
RSI = 100 – [100/(1+RS)]
Where RS is the average for X trading periods, the value of all closing prices that were higher than previous closing prices
divided by the average for the same X periods value of all closing prices that were lower than the previous ones.

RSI is usually calculated for 14 trading periods.

The RSI chart is constructed with a scale of 0 to 100%, where the levels of 30% and 70% are warning signals, and reaching levels above 85% and below 15% are signals respectively buy (due to overbought market conditions) and sell (due to overbought market conditions) for the onset of oversold).

With technical analysis using RSI, it is very effective to use << Bollinger Lines >>. It is believed that in the cases when the RSI values are high and the price chart touches the upper limit of the Bollinger range, the market is preparing to sell the underlying asset.

Commodity Channel Index

The CCI indicator measures deviations of the price of the currency from its average statistical values. The maximum level of this indicator indicates a serious deviation of the price from the average to the top, the minimum – down.