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The post All course lessons appeared first on Stock Trading - Technical Analysis.
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]]>if you still haven’t found a proper site/software to analyse charts I recommand
this free software but any other proper tool will be just fine.
After you tried for yourself check out the solution here
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1. The first line we draw is the resistance trend line marked as 1.
2. The second line we draw, is the support trend line marked as 2.
3. resistance trend line marked as 3.
4. Fibonacci retracement marked as 4.
We can see that the 1 line is still strong and forms a strong resistance for the S&P index in the short term.
Lines 2 and 3 forms together a canal that brakes at the end. since the support line 2 was broken, it now will become a resistance line for the future.
We can see that the index stoped at the fibonacci line of 38.2%, if the index will go under this line, it we will probably fall all the way to the 50% fibonacci line, that also integrates with the 140 points line. My guess is that this will be our next support line.
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1. resistance line marked as 1.
2. resistance line that became support line marked as 2, on 142.13
3. support line marked as 3.
Note, the more times the graph touches the line, the line is considered stronger and more reliable.
4. fibonacci retracement , marked as 4. we can see that the 61.8% line has stopped the big latest breakdown.
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The calculations are as follows. The typical price for each day is the average of high, low and close,
Money flow is the product of typical price and the volume on that day.
Totals of the money flow amounts over the given N days are then formed. Positive money flow is the total for those days where the typical price is higher than the previous day’s typical price, andnegative money flow where below. (If typical price is unchanged then that day is discarded.) A money ratio is then formed
From which a money flow index ranging from 0 to 100 is formed,
This can be expressed equivalently as follows. This form makes it clearer how the MFI is a percentage,
MFI is used as an oscillator. A value of 80 is generally considered overbought, or a value of 20 oversold. Divergences between MFI and price action are also considered significant, for instance if price makes a new rally high but the MFI high is less than its previous high then that may indicate a weak advance, likely to reverse.
It will be noted the MFI is constructed in a similar fashion to the relative strength index. Both look at up days against total up plus down days, but the scale, i.e. what is accumulated on those days, is volume (or dollar volume approximation rather) for the MFI, as opposed to price change amounts for the RSI.
It’s important to be clear about what “money flow” means. It refers to dollar volume, i.e. the total value of shares traded. Sometimes finance commentators speak of money “flowing into” a stock, but that expression only refers to the enthusiasm of buyers (obviously there’s never any net money in or out, because for every buyer there’s a seller of the same amount).
For the purposes of the MFI, “money flow”, i.e. dollar volume, on an up day is taken to represent the enthusiasm of buyers, and on a down day to represent the enthusiasm of sellers. An excessive proportion in one direction or the other is interpreted as an extreme, likely to result in a price reversal.
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