Getting to Know the Types of Double Line Technical Analysis in Stock Investing

KokoYo, Chinarainbow.org – Double-line technical analysis in stock investment is a deeper way of dissecting or reviewing stock price movements.

In general, there are two basic types of technical analysis indicators that you need to know. First, are overlays, which are the trend-determining lines whether the stock goes up or down.

Overlays can be seen above or below the candle or bar. Moving averages (MA) and Bollinger Bands (BB) are examples.

Second, it is oscillators that appear separate from the price movement chart as well as the initial or final determinant bar of a trend.

However, there are several types of double-line technical analysis in stock investing, which you can learn in order to help with investing decisions.   Here are the types of double-line technical analysis in stock investments that investors need to understand:

1.On-Balance Volume (OBV) OBV is a technical analysis of a stock that combines the price and volume of a stock. In short, OBV is used to confirm stock price movements. When the OBV goes up, it means that the purchase volume exceeds the sales volume which leads to pushing the price higher. Conversely, if the OBV falls, then sales exceed the purchase volume and have an impact on the price decline.

2.Accumulation/Distribution Line Accumulation/Distribution Line is known as the A/D line. This line is the most commonly used indicator and is able to determine the flow of money in and out of securities. It is almost similar to an OBV, but the A/D line only considers stocks for a certain period.

3.Average Directional Index (ADX) ADX is a trend indicator used to measure trend strength and momentum. ADX analysis uses lines or numbers 20 and 40. That is, if the line is below 20, then the strength of the trend again decreases. And conversely, a line above 40 indicates the strength of an increasing trend. ADX is defined by a black line and is in the middle between the numbers 20 and 40.

4.Aroon Indicator Aroon Oscillator is a stock technical analysis indicator to show the strength of the trend and the accuracy of the entry point or identify a new trend to begin. The Aroon indicator consists of two lines, namely Aroon-up (green) and Aroon-down (red). When the Aroon-up line cuts above the Aroon-down line, and vice versa, it means there is a possibility of a trend change. If Aroon-down is at zero and intersects with Aroon-up, it means that it indicates the entry point and trend trend trend will rise and vice versa.

5.Technical analysis of stocks – MACD stands for Moving Average Convergence Divergence. MACD becomes the mainstay indicator of traders. The reason is, this indicator is relatively easy to use to show the strength of the trend.  This indicator consists of two lines, the MACD line and the signal line, which move more slowly. A signal line above zero indicates an up-trend is underway. Furthermore, if the line is below zero, then a down-trend is happening.

6.Relative Strength Index (RSI) Relative Strength Index or RSI is the reference line of technical analysis of stocks in the form of middle or zero numbers. The standard, RSI is at 30 and 70. RSI indicates overbought and oversold conditions. Overbought is indicated if the price touches or exceeds the 70 mark. While oversold will occur if the price touches or below the number 30. Rsi can also be an indicator of support and resistance levels.

7.Stochastic Oscillator Stochastic oscillator is an indicator that measures the current relative price against the price range in a given period. Similar to rsi, the stochastic oscillator consists of two lines that are zero and 100. The lines are usually green and red.  If the green line is above the red line, it means that the trend is up. However, if the green line intersects with the red line, then it means that the trend tends to go down. Thus the Types of Dual Line Technical Analysis in Stock Investment, hopefully useful for you in determining investment decisions.

 

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