Advanced Technical Analysis

What is Advanced Technical Analysis?

This page provides professional-grade technical indicators used by institutional traders to analyze price movements, trends, and market momentum.

🔍 Available Indicators

• Ichimoku Cloud: Multi-dimensional support/resistance with trend direction
• Stochastic Oscillator: Momentum indicator comparing closing price to price range
• Williams %R: Overbought/oversold momentum oscillator
• ADX: Measures trend strength regardless of direction
• Parabolic SAR: Stop and Reverse points for trend following
• OBV: Volume-based momentum indicator
• ATR: Volatility measurement for risk management
• Fibonacci Retracements: Key support/resistance levels
• Pivot Points: Intraday support/resistance calculations
• VWAP: Volume-weighted average price for institutional levels

📈 How to Use

1. Search for a stock by symbol or name
2. Select analysis period (1M to 5Y)
3. Click "Analyze Stock"
4. Review consolidated signals and individual indicators
5. Make informed trading decisions based on multiple confirmations

How Signals Are Calculated

The Consolidated Signal aggregates multiple technical indicators to provide an overall market sentiment.

Signal Categories

• STRONG BUY (80-100%): Majority of indicators show bullish signals
• BUY (60-80%): More bullish than bearish indicators
• NEUTRAL (40-60%): Mixed signals, no clear direction
• SELL (20-40%): More bearish than bullish indicators
• STRONG SELL (0-20%): Majority of indicators show bearish signals

Indicators Analyzed

Each indicator contributes +1 (bullish), 0 (neutral), or -1 (bearish) to the final score:

• Stochastic Oscillator (overbought/oversold levels)
• Williams %R (momentum direction)
• ADX (trend strength and direction)
• Parabolic SAR (price vs SAR position)
• OBV (volume trend)
• VWAP (price vs institutional levels)
• Ichimoku Cloud (price vs cloud position)

What is Ichimoku Cloud?

The Ichimoku Kinko Hyo (equilibrium chart at a glance) is a comprehensive indicator that defines support/resistance, identifies trend direction, gauges momentum, and provides trading signals.

Components

• Tenkan-sen (Conversion Line): (9-period high + 9-period low) / 2
• Kijun-sen (Base Line): (26-period high + 26-period low) / 2
• Senkou Span A (Leading Span A): (Tenkan-sen + Kijun-sen) / 2, plotted 26 periods ahead
• Senkou Span B (Leading Span B): (52-period high + 52-period low) / 2, plotted 26 periods ahead
• Chikou Span (Lagging Span): Current closing price plotted 26 periods back
• Kumo (Cloud): Area between Senkou Span A and B

How to Interpret

• Price above Cloud: Bullish trend (buy zone)
• Price below Cloud: Bearish trend (sell zone)
• Price in Cloud: Consolidation/ranging market
• Tenkan crosses above Kijun: Bullish signal (golden cross)
• Tenkan crosses below Kijun: Bearish signal (death cross)
• Green Cloud (Span A > Span B): Bullish support
• Red Cloud (Span A < Span B): Bearish resistance

Trading Strategy

1. Look for price breakouts above/below the cloud
2. Wait for Tenkan/Kijun crossover confirmation
3. Use thick parts of cloud as strong support/resistance
4. Chikou Span above price = additional bullish confirmation

What is the Stochastic Oscillator?

The Stochastic Oscillator is a momentum indicator that compares a particular closing price to a range of prices over a certain period, showing the location of the close relative to the high-low range.

Calculation

How to Interpret

• Above 80: Overbought zone - potential sell signal
• Below 20: Oversold zone - potential buy signal
• %K crosses above %D: Bullish signal
• %K crosses below %D: Bearish signal
• Divergence: Price makes new high/low but Stochastic doesn't = reversal warning

Trading Signals

1. Basic: Buy when < 20, sell when > 80
2. Crossover: Buy when %K crosses above %D in oversold zone
3. Divergence: Bullish divergence in oversold = strong buy, bearish divergence in overbought = strong sell

What is Williams %R?

The Williams %R is a momentum indicator that measures overbought/oversold levels, similar to Stochastic but inverted (ranging from 0 to -100).

Calculation

How to Interpret

• -20 to 0: Overbought zone - consider selling
• -80 to -100: Oversold zone - consider buying
• -50: Centerline (neutral zone)
• Crosses above -80: Bullish momentum building
• Crosses below -20: Bearish momentum building

Trading Strategy

1. Reversal Trading: Buy when Williams %R rises from oversold zone (-80+)
2. Trend Following: In uptrend, buy dips to -40 to -80 zone
3. Failure Swings: %R fails to reach overbought/oversold = trend strength
4. Divergence: Price makes new high but Williams %R doesn't = bearish divergence

Differences from Stochastic

• Williams %R is more volatile and sensitive
• Better for short-term trading
• No smoothing (%D line)
• Inverted scale (negative values)

What is ADX?

The Average Directional Index (ADX) measures the strength of a trend, regardless of direction. It's a non-directional indicator that quantifies trend strength on a scale from 0 to 100.

Components

• ADX Line: Trend strength (0-100)
• +DI (Plus Directional Indicator): Upward movement strength
• -DI (Minus Directional Indicator): Downward movement strength

Calculation

How to Interpret

• ADX < 20: Weak trend, ranging market (avoid trend-following strategies)
• ADX 20-25: Developing trend
• ADX > 25: Strong trend (good for trend-following)
• ADX > 40: Very strong trend
• ADX > 50: Extremely strong trend (rare)

Trading with +DI and -DI

• +DI above -DI + ADX > 25: Strong uptrend - stay long
• -DI above +DI + ADX > 25: Strong downtrend - stay short
• +DI crosses above -DI: Potential buy signal
• -DI crosses above +DI: Potential sell signal

What is Parabolic SAR?

The Parabolic SAR (Stop And Reverse) is a trend-following indicator that provides entry/exit points and trailing stop-loss levels. The dots appear above or below price to indicate trend direction.

How it Works

The SAR dots "follow" price action, accelerating as the trend develops. When price crosses the SAR, the indicator "flips" to the other side, signaling a potential trend reversal.

Calculation

How to Interpret

• Dots below price: Uptrend - stay long
• Dots above price: Downtrend - stay short
• Dots flip: Potential trend reversal - close position and reverse
• Dots accelerating away from price: Strong trend
• Dots close to price: Trend losing momentum

Trading Strategy

1. Trend Following: Buy when SAR flips below price, sell when it flips above
2. Stop Loss: Use SAR dots as trailing stop-loss levels
3. Confirmation: Combine with trend indicators (ADX, Moving Averages)
4. Exit: Exit when SAR flips, regardless of profit/loss

What is OBV?

The On-Balance Volume is a cumulative momentum indicator that uses volume flow to predict changes in stock price. The premise is that volume precedes price movement.

Calculation

How to Interpret

• OBV rising + Price rising: Healthy uptrend (volume confirms price)
• OBV falling + Price falling: Healthy downtrend (volume confirms price)
• OBV rising + Price falling: Bullish divergence - potential reversal up
• OBV falling + Price rising: Bearish divergence - potential reversal down

Key Signals

• Trend Confirmation: OBV moving in same direction as price = strong trend
• Divergence: OBV moving opposite to price = warning sign
• Breakout Confirmation: OBV breaking to new high/low confirms price breakout
• Support/Resistance: OBV can have its own S/R levels

Trading Examples

1. Accumulation: Price flat but OBV rising = smart money buying, breakout likely
2. Distribution: Price flat but OBV falling = smart money selling, breakdown likely
3. Trend Weakness: New price high but OBV doesn't confirm = weak trend

What is ATR?

The Average True Range measures market volatility by calculating the average range between high and low prices over a period. Higher ATR = higher volatility.

Calculation

How to Interpret

• High ATR: High volatility - larger price swings expected
• Low ATR: Low volatility - smaller price movements
• Rising ATR: Increasing volatility, potential breakout
• Falling ATR: Decreasing volatility, consolidation

Practical Applications

• Stop Loss Placement: Set stops at 2-3× ATR from entry
• Position Sizing: Risk same $ amount → smaller position in high ATR stocks
• Profit Targets: Target 2-3× ATR for realistic profit goals
• Breakout Confirmation: Breakout with rising ATR = stronger signal

ATR-Based Stop Loss Example

What are Fibonacci Retracements?

Fibonacci Retracements are horizontal lines that indicate potential support/resistance levels based on the Fibonacci sequence. These levels represent key percentages where price might reverse or pause.

Key Levels

• 0%: Recent high (or low in downtrend)
• 23.6%: Shallow retracement
• 38.2%: Moderate retracement
• 50%: Psychological midpoint (not Fibonacci, but widely watched)
• 61.8%: The "Golden Ratio" - most important level
• 78.6%: Deep retracement
• 100%: Recent low (or high in downtrend)

How to Use

1. Identify Trend: Find significant high and low points
2. Draw Levels: In uptrend, draw from low to high. In downtrend, high to low
3. Watch for Bounces: Price often finds support/resistance at these levels
4. Entry Points: Buy dips at Fib levels in uptrend, sell rallies in downtrend

Trading Strategy

• Strong Trend: Expect retracements to 38.2% or 50%
• Normal Correction: 50% to 61.8% retracement is common
• Deep Pullback: 78.6% level is last support before trend reversal
• Break of 100%: Trend likely reversing

The Golden Ratio (61.8%)

The 61.8% level is the most reliable. Price often bounces here, and if it breaks, the trend may be over.

What are Pivot Points?

Pivot Points are technical indicators used to determine potential support and resistance levels for the current trading day, based on the previous day's high, low, and close.

Standard Pivot Points

Fibonacci Pivot Points

Uses Fibonacci ratios (38.2%, 61.8%, 100%) instead of fixed multipliers for more "natural" support/resistance levels.

Camarilla Pivot Points

Developed for intraday trading, Camarilla pivots have 4 resistance and 4 support levels, with tighter spacing for precise entries/exits.

How to Interpret

• P (Pivot): Fair value - price above = bullish, below = bearish
• R1, R2, R3: Resistance levels (profit targets when long)
• S1, S2, S3: Support levels (profit targets when short)
• Break of R3/S3: Strong trend - expect continuation

Trading Strategies

1. Range Trading: Buy at S1/S2, sell at R1/R2
2. Breakout Trading: Buy break above R1, sell break below S1
3. Trend Continuation: In uptrend, buy dips to Pivot or S1
4. Reversal: Watch for rejection at R2/R3 or S2/S3

What is VWAP?

The Volume Weighted Average Price is the average price weighted by volume. It represents the "fair value" price where most institutional trading occurred.

Calculation

How to Interpret

• Price above VWAP: Bullish - buyers in control, institutional support
• Price below VWAP: Bearish - sellers in control, institutional resistance
• Price at VWAP: Fair value - equilibrium between buyers and sellers
• VWAP acts as magnet: Price tends to revert to VWAP

Standard Deviation Bands

• +1 SD: Normal upper range
• +2 SD: Overbought - expect pullback to VWAP
• -1 SD: Normal lower range
• -2 SD: Oversold - expect bounce to VWAP

Trading Strategies

1. Mean Reversion: Buy at -2 SD, sell at +2 SD, target VWAP
2. Trend Following: In uptrend, buy dips to VWAP
3. Institutional Level: Large orders often placed near VWAP
4. End-of-Day: If close above VWAP = bullish, below = bearish

Why Institutions Use VWAP

Institutional traders use VWAP as a benchmark:

• Buy orders executed below VWAP = good fill
• Sell orders executed above VWAP = good fill
• Algorithms target VWAP to minimize market impact