Hello, I am Shizaibiying. As my followers exceed 1.9K, I would like to share some useful information with my followers. I hope everyone will make a fortune in this bull market! Next, I will share the usage of BOLL (Bollinger Bands), MACD, KDJ, and RSI indicators!
🔶MACD (Moving Average Convergence Divergence)
👉🏻Basic principle:
MACD is calculated from the difference between two exponential moving averages (EMA) of different speeds, including a fast line (DIF) and a slow line (DEA), and the bars that fluctuate around them (MACD-bar).
👉🏻Usage:
⭐️Golden Cross and Death Cross:
🔸When the DIF line crosses the DEA line, a golden cross is formed, which is usually regarded as a buy signal.
🔸When the DIF line crosses below the DEA line, a death cross is formed, which may be a sell signal.
⭐️Divergence judgment:
🔸If the price hits a new high or a new low but the MACD does not hit a new high or a new low at the same time, it may indicate a trend reversal.
🔸For example, if the price hits a new high but the MACD indicator does not, this may be a top divergence, suggesting that the price may fall.
⭐️Observe MACD-Histogram:
🔸When the MACD column changes from negative to positive and gradually increases, it may mean that market buying momentum is increasing.
🔸When the MACD column changes from positive to negative and gradually increases, it may indicate an increase in selling pressure.
🔶BOLL (Bollinger Bands)
👉🏻Basic principle:
It consists of three track lines, with a simple moving average in the middle and the upper and lower lines respectively obtained by adding and subtracting a certain multiple of the standard deviation on the basis of the moving average.
👉🏻Usage:
⭐️Price channel judgment:
🔸When the price fluctuates near the middle track of the Bollinger Bands, it means that the market is in a relatively stable state.
🔸When the price touches the upper track, it may mean that the market is overbought and there is pressure for the price to pull back.
🔸When the price touches the lower track, it may mean that the market is oversold and there is a possibility of a rebound.
⭐️Bandwidth changes:
🔸The narrowing of the Bollinger Bands usually indicates that the market is about to choose a direction and may experience large fluctuations;
🔸A wider bandwidth indicates increasing market volatility.
⭐️Combined with trend lines:
🔸If the price moves along the upper or lower Bollinger Bands and is accompanied by an obvious trend line, it can be used as a signal to confirm the trend.
🔶KDJ (Stochastic Indicator)
👉🏻Basic principle:
By calculating the relationship between the highest price, lowest price and closing price over a period of time, the K value, D value and J value are obtained.
👉🏻Usage:
⭐️Overbought and oversold judgment:
🔸Generally speaking, when the K value and D value are above 80, the market is overbought and there may be a risk of a pullback.
🔸When the K value and D value are below 20, the market is oversold and there may be a chance of a rebound.
⭐️Golden Cross and Death Cross:
🔸The K line crosses the D line upward to form a golden cross, which can be regarded as a buy signal.
🔸The K line crosses the D line downward to form a death cross, which may be a sell signal.
🔸The change of J value is more sensitive and can be used as an auxiliary judgment.
⭐️Divergence analysis:
🔸If the price reaches a new high or a new low, but the KDJ indicator does not reach a new high or a new low at the same time, it may indicate a trend reversal.
🔶RSI (Relative Strength Index)
👉🏻Basic principle:
By comparing the extent of increases and decreases over a period of time, it measures the relative strength of buyers and sellers in the market.
👉🏻Usage:
⭐️Overbought and oversold judgment:
🔸RSI value above 70 is overbought and the market may pull back.
🔸RSI value below 30 is oversold and the market may rebound.
⭐️Divergence Signals:
🔸When the price trend is inconsistent with the RSI indicator trend, a divergence may occur. If the price reaches a new high but the RSI does not reach a new high, it may be a top divergence, suggesting that the price may fall.
🔸On the contrary, if the price hits a new low but the RSI does not, it may be a bottom divergence, indicating that the price may rise.
⭐️Trend confirmation:
🔸When the RSI is above 50, it indicates that the market is strong and may rise.
🔸When RSI is below 50, the market is relatively weak and may fall.
🔸At the same time, observing the slope of RSI can help determine the strength of the trend.
It should be noted that the above four commonly used indicators are not absolutely accurate and should be combined with other analysis methods and market conditions for comprehensive judgment. If you feel that the content of the article is helpful to you, please like and follow us, and we will share more valuable content with you in the future!
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