Category Archives: Analisa Teknikal

Williams %R

Williams %R was developed by Larry Williams to indicate overbought and oversold levels. The indicator is very similar to Stochastic %K – except that Williams %R is plotted using negative values ranging from 0 to -100.

The number of periods used to calculate Williams %R can be varied according to the time frame that you are trading. A rule of thumb is that the indicator window should be half the length of the cycle (14 days is popular for the intermediate cycle).

Overbought and Oversold levels are normally set at -20 and -80.

Trading Signals

Ranging Markets

Use trailing buy- and sell-stops, to enter and exit trades, and protect yourself with stop-losses.

Long signals:

1. Go long on bullish divergence or failure swing;
2. Go long when Williams %R falls below the oversold level.

Short signals:

1. Go short on bearish divergence or failure swing;
2. Go short when Williams %R rises above the overbought level.

Example 1

Johnson and Johnson is displayed with 7 day Williams %R.

1. Mouse over chart captions to display trading signals.
2. Place a trailing buy-stop when Williams %R falls below the oversold line. We are stopped in [L] when price rises above the previous day’s High. Protect your position with a stop-loss below the recent Low.
3. Place a trailing sell-stop when %R rises above the overbought line. We are stopped in [S] when price falls below yesterday’s Low. The position is stopped out [X] on the following day when price rises above the recent High.
   %R rises above the overbought level. Place a trailing sell-stop. A bearish divergence supports the signal.
4. A triple divergence adds further support for the short position.
5. Place a trailing buy-stop when %R falls below -80. When stopped in [L], place a stop-loss below the recent Low.
6. Place a trailing sell-stop when %R rises above -20. When stopped in [S], place a stop-loss above the recent High.
7. Place a trailing buy-stop: the oversold signal is strengthened by a bullish divergence.
8. Place a trailing sell-stop.
9. %R falls below the oversold level: place a trailing buy-stop. A failure swing is completed when %R rises above the level of the intervening peak.
10. Another signal to go short. Place a trailing sell-stop. We are stopped in 5 days later when price falls below the previous day’s Low.
11. Protect your position with a stop-loss above the recent High.

Trending Markets

It is advisable to use a longer Williams %R period or some other form of smoothing to reduce volatility and false signals.
Signals should only be taken when there is clear evidence that the trend has reversed. One method of doing so is to wait until %R crosses the -50 level:

• Go long when %R falls below the Oversold level then rises above -50.
• Go short when %R rises above the Overbought level then falls below -50.

Alternatively, use a trend indicator for trend direction and exit signals.

Example 2

Johnson and Johnson with 30 day exponential moving average (MA) and 14 day Williams %R: The chart shows a fairly strong up-trend, suitable for trading with %R trend signals.

1. Go long [L]: Williams %R rises from the oversold level to above -50.
2. Go short [S] when %R falls below -50 from the overbought level.
3. Go long [L] when %R rises above -50 from the oversold level.
4. Go short [S]
5. Go long [L]
6. Go short [S]
7. Go long [L]

Note that we are whipsawed fairly frequently if MA is used as the trend indicator, even with closing price as a filter.

Setup

The default Williams %R window is 14 days, with overbought/oversold levels of -20% and -80% respectively. To alter the default settings – Edit Indicator Settings.

Formula

1. The first step is to decide on the number of periods (%R Periods) to be included in the calculation. This can be varied between 5 and 21 days, based on the time frame that you are analyzing.
2. Calculate %R, by comparing the latest Closing price to the range traded over the selected period:

HC = Highest High [in %R Periods] – Close [today]
HL = Highest High [in %R Periods] – Lowest Low [in %R Periods]
%R = HC / HL * -100

The formula is similar to Stochastic %K, the difference being that CL is used in place of HC above.

CL = Close [today] – Lowest Low [in %K Periods]

Views – 205

Gaps

Gaps occur when the lowest price traded is above the high of the previous day or, conversely, when the highest price traded is below the previous day’s low.

A gap is filled when the range of subsequent bars closes the gap.

There are two basic rules:

• Avoid trading common gaps, and
• Only trade gaps when they are confirmed by volume.

Equivolume charts highlight the interaction of price and volume.

Common Gaps

Common gaps occur in markets without a strong trend. They are not followed by new highs or new lows and are quickly closed in subsequent days’ trading.
Some gaps are caused by events and should be ignored:

• Ex-dividend gaps occur as price adjusts on the day after a dividend becomes payable;
• New share issues; and
• Expiry of futures contracts.

Breakaway Gaps

Breakaway gaps are normally accompanied by heavy volume and occur when prices break out of a trading range. They are usually followed by a series of new highs in an upside breakout or, a series of new lows in a downside breakout, and are seldom closed.

Trading Rules

Upside Breakaway

• If the gap is accompanied by heavy volume, go long and place a stop-loss at the lower end of the gap.

Downside Breakaway

• If the gap is accompanied by heavy volume, go short and place a stop-loss at the upper end of the gap.

Continuation Gaps

Continuation gaps occur near the middle of strong trends and are useful in projecting how far the trend will continue. They are followed by new highs in an up-trend or new lows in a down-trend, which distinguishes them from exhaustion gaps. They are not normally closed.

Trading Rules

If volume is strong (up at least 50%), trade as for breakaway gaps. Enter the trade early and wait for new highs (or new lows in a down-trend) to confirm the pattern. If there are none in the next few days then exit immediately — it could be an exhaustion gap.

Exhaustion Gaps

Exhaustion gaps occur at the end of a strong trend and are the last surge before the trend expires, normally on heavy volume. They differ from continuation gaps in that they are not followed by new highs (in an up-trend) or new lows (in a down-trend) and are closed shortly afterwards.

Trading Rules

Upward Exhaustion Gap

• Sell short (or close your long position) and protect yourself with a stop above the last high.

Downward Exhaustion Gap

• Go long (or close your short position) with a stop below the latest low point.

Island Clusters

Look out for island clusters, identified by an exhaustion gap followed (after a few days) by a breakaway gap in the opposite direction, they are powerful reversal signals.
Trading Rules

Trade in the same way as exhaustion gaps.

Views – 852

Commodity Channel Index

The Commodity Channel Index measures the position of price in relation to its moving average. This can be used to highlight when the market is overbought/oversold or to signal when a trend is weakening. The indicator is similar in concept to Bollinger Bands but is presented as an indicator line rather than as overbought/oversold levels.

The Commodity Channel Index was developed by Donald Lambert and is outlined in his book Commodities Channel Index: Tools for Trading Cyclic Trends.

Trading Signals

Commodity Channel Index is best used in conjunction with trailing buy- and sell-stops.

Ranging Market

• Go long if the CCI turns up from below -100.
• Go short if the CCI turns down from above 100.

Trending Market

Divergences are stronger signals that occur less frequently. They are mostly used to trade intermediate cycles.

• Go long on a bullish divergence.
• Go short on a bearish divergence.

Example

IBM Corporation with 14 day Commodity Channel Index. The days shown are the signal days. Trades are entered using trailing buy- and sell-stops on the day following.

S1: Go short – Commodity Channel Index turns down above the overbought line. This trade is stopped out at the rally before S2.
S2: Go short – bearish divergence. This trade is stopped out during the rally before S3.
S3: Go short – bearish triple divergence.
L1: Go long – Commodity Channel Index turns up from below the oversold line. The next day closes below the low of the signal day, causing the trade to be stopped out. A trailing buy-stop would stop us back in two days later.
S4: Go short – Commodity Channel Index turns down above the overbought line.
L2: Go long – Commodity Channel Index turns up from below the oversold line.
S5: Go short – Commodity Channel Index turns down above the overbought line and bearish divergence occurs.
L3: Go long – Commodity Channel Index turns up from below the oversold line and bullish divergence occurs.
?: The market is now trending (evidenced by the break above the previous high).
Do not go short when Commodity Channel Index turns down above the overbought line – wait for a bearish divergence.
S6: Go short – bearish divergence.
S7: Even stronger signal – bearish triple divergence

.
Setup

The default Commodity Channel Index is set at 20 days with Overbought/Oversold levels at 100/-100. To alter the default settings – Edit Indicator Settings.

Views – 246