Complete immersion in techanaliz: oscillators – technical indicators of Flat

In the next material of the special project, readers learn about whether it is possible to trade cryptocurrency if the price moves “sideways” and there is no pronounced trend, as well as what instruments of technical analysis (TA) are necessary to identify the moments of reserves and overwhelming on the market.

In the previous material, some popular trend indicators were considered, which help to decide on the opening or closing of the position, if the market is clearly traced on the market.

To carry out small short -term transactions in conditions of lateral movement, traders often use the technical indicators of the Flat – oscillators.

What is an oscillator

Oscillator – TO tool that allows you to identify short -term overlap or resale in the market. This tool is most useful in the absence of a clear trend on the market, with a side movement of prices.

Consider several popular and relatively simple oscillators.

Average True Range (ATR)

The average true range (Average True Range, ATR) is an indicator that, although it does not determine the trend, but it can be effectively used as a measure of its volatility.

As you can see on the graph below, during periods of strong and high -voltage motion the ATR values ​​are high:

When FLET is on the market, then Average True Range is at low values. Thus, the higher the value of the indicator, the higher the probability of an ambulance trend. On the other hand, the lower the ATR value, the weaker the focus of the trend.

The values ​​of the ATR indicator should be taken into account when choosing a transaction size. The latter, however, largely depends on the individual risk tendency.

This indicator can also be used to confirm the trend strength. So, with strong movement on the market, the value of the ATR increases. With a weak price movement, the indicator values ​​are at a low level.

Average True Range can be used at any timeframe from H1 and above. By default, the period of averaging in the ATR settings is set at 14.

Stochastic

Stochastic oscillator (Stochastic Oscillator, Stochastic) – a popular indicator used to determine the periods of overhabitation and resell on the market, as well as to identify the moments of potential turning of the trend based on bull or bear divergence.

In the implementation of technical analysis, three important aspects are taken into account by stochastic:

• The value of the indicator above 80 indicates overhabitation in the market;
• level 50 – a kind of central line;
• The level below 20 speaks of resold in the market.

The “classic” Stochastic settings are:

• line %K for 14 periods;
• Signal line smoothing interval 3.

One of the simplest ways to use the Stochastic indicator is to identify the moments of overwhelming and resold in conditions of a stable lateral trend.

A suitable opportunity to open a long position can occur when the signal line %D (orange) is returned to the indicator range (above level 20) and moves in one direction with %K (blue).

On the other hand, a signal for opening a short position (sale) appears when the line %D drops into the range below 80, moving in the same direction from %K.

The use of this strategy with a pronounced bull -clicking trend can only be justified to open a transaction for the purchase at the moments of internal corrections. In this case, the ideal moment for opening a long position may be the return of the %D line to the range above level 20 and its movement in one direction from %K.

In other cases, in conditions of a pronounced upward Stochastic trend, it is not worth using, since most signals of this indicator may be false.

In the context of the prevalence of sellers in the market, the trader should pay attention to the signals of Stochastic about overwhelming, ignoring the resale.

So, below on the daily graph of ETH/USD, a bear trend is observed. Intranded ascending correction is highlighted by a blue dashed line.

The arrow marked a signal for the sale on the Stochastic indicator at the time of the return of both lines from the battleship zone to the range below 80.

Relative force index (Relative Strength Index, RSI) – a technical indicator of the moment comparing the size of recent growth with the dynamics of recent falls. As well as the above Stochastic, RSI determines the periods of reserves and overlaps of the asset.

The RSI indicator range is located between the 0 and 100 marks. The asset is considered to be bought if the indicator value approaches 70, or already exceeds it. In such cases, traders often open short positions to fix the profit.

If the RSI is located around 30, then this indicates a significant retardation of the asset, which, most likely, should be bought.

Thus, you should not buy an asset when RSI is above the level of overwhelming. It is not worth selling when this oscillator is below the resale level.

A rather close correlation between the RSI readings and the cost of the asset is visible on the graph above, which indicates the relatively high efficiency of this indicator.

Convergence/discrepancy between sliding medium (Moving Average Convergence/Divergence, MacD) is one of the most popular technical analysis tools that combines the properties of a trend indicator and oscillator.

The absence of the lower and upper boundary is distinguished from the above oscillators. Therefore, this tool is not suitable for identifying the moments of resale.

Graphically, the MACD is represented by two lines and histogram:

The creator of the MACD Gerald Appel at one time recommended using the following setting parameters for large timeframes (daily or more):

• 12 – for quick EMA;
• 26 – for slow EMA;
• 9 – for the signaling line.

When using MACD, traders mainly use three types of signals:

• intersection of exponential sliding medium;
• The intersection of the MACD of the zero level (central line) by the Top 6 crypto scams. blue line;
• divergence (divergence of the direction of the price of the asset with indicator lines) .

The easiest way to use this indicator is when the blue MACD line crosses an orange signal line. As a rule, at the same time, the zero level and the MACD histogram are crossed:

As can be seen on the graph above, the intersection of lines from above-down and overcoming a zero level histogram gives a signal for sale. Conversely, the intersection of lines from the bottom-up and the moment the histogram transition from negative values ​​to the positive generates a signal for the purchase.

Also, the signals for the purchase/sale are generated at the time of intersection by a blue-level MACD line (in the direction from the bottom-up-a long position, and on top-down-short).

The third type of signal arises as a result of the discrepancy (divergence) of the MACD and the price of the asset. For example, on an upward trend, the price continues to grow, and against the background of this line of the indicator, they lower down. This state of affairs indicates a weakening of the trend and the high probability of turning. Traders often consider bull divergence as a signal for sales.

Bear divergence is also considered a relatively reliable purchase signal. It occurs when, with the descending movement, the price of the MACD line gradually rise up.

It is also worth noting that since the MACD has the properties of a trend indicator, its use can be as effective as possible during periods of pronounced trend movement. At the same time, signals for purchase with a bull trend and sale are considered to be quite reliable – on the descending.

Is it possible to use several indicators at the same time?

The answer is yes! Unfortunately (or fortunately, who knows?), we live in a minor world. As stated in previous materials, there are no ideal or universal tools, as well as techanalysis strategies. Indicators and oscillators are also imperfect – they often delay, or simply give false signals.

However, an integrated approach using two or three technical indicators and knowledge of the main models of Japanese candles at once can increase the accuracy of the analysis to some extent, as well as give a little confidence to the trader.

So, traders often use Stochastic and RSI simultaneously. There are several reasons for this:

• The STOCHASTIC oscillator is somewhat more mobile, and therefore reaches the moments of reserving/overhabitation a little faster than RSI;
• Although Stochastik reacts a little faster than RSI, its signals are considered less reliable than those that come from the index of relative force.

Many traders are sure that the signals for the purchase or sale are most reliable when the lines of these two indicators are simultaneously in the zones of resale or overhabitation, respectively. To open a position more precisely, you should wait when the Stochastic lines begin to return to the range between 20 and 80.

In addition, you can quite successfully combine the MACD indicator with the oscillator RSI. Below, on the graph, you can see that in December last year these tools (albeit with some late, but still) pointed out a favorable moment for fixing profit in pair BTC/USD.

Then, in February already next year, these tools indicated a good moment for purchase on the bottoms.

Also, many traders use Stochastic pairs with stripes of the Bolinger:

Some novice traders try to choose a “magical” and super -efficient combination of indicators. However, the reality is such that it is impossible to achieve one hundred percent results.

Keep your nose on the trend, beware of false signals and may the Power of Profit be with you!

Glossary to the article

Divergence – discrepancy between price schedule and indicator readings. Divergence is considered a relatively reliable signal about the weakening of the price movement and the approaching turning of the trend. Moreover, the more the time period, the stronger the signal is considered.

Risk tendency – the degree of readiness of the trader/investor to work with high -risk assets; The degree of uncertainty that the investor can afford on the possible negative change in the value of his portfolio of assets.

Correction – temporary reduction in price interrupting the upward trend. Often the reason for the correction is to fix profit by investors. The term “correction” can also be used in relation to the falling market, finding expression in short -term periods of price growth.