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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: Charger who wrote (5250)9/13/1998 3:36:00 PM
From: TraderAlan  Read Replies (2) of 12617
 
Charger,

You missed a link for Money Flow at MarketWatch as they forgot to underline it:

"Money Flow
A Volume-weighted version of the relative strength index, but instead of using up closes vs. down closes, Money Flow compares the current interval's average price to the previous interval's average price and then weighs the average price by volume to calculate money flow. The ratio of the summed positive and negative money flows are then normalized to be on a scale of 0-100."

Can't tell your exact use for MACD as there are no rules on color. But the signal line is the slower one and they do both move together. Neither is an MA. Both are derivations of MAs.

From Momentum: Riding the Tiger, a chapter in my Trader's Wheel educational series:

MACD Indicator and Histogram

1. MACD Formula

A = 12 period EMA (Closing Price)

B = 26 period EMA (Closing Price)

Fast MACD Line = A - B

Slow Signal Line = 9 period EMA (Fast MACD Line)

2. To Create Indicator

Plot both lines individually

3. To Create Histogram

Subtract Slow Signal Line from Fast MACD Line and plot

OBV and MACD look at completely different things. OBV is a volume accumulation indicator. OBV also gives a lot of false readings in the NASDAQ markets as volume is double counted there. But in general, divergent indicators are one of the complexities of technical analysis. Sometimes they represent nothing more than noise. Other times, they're screaming some message. The trick is seeing what the rest of the chart is saying. For me that means looking at the price pattern first and the indicators second.

Alan
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