1. Accumulation / Distribution indicator

Accumulation / Distribution technical indicator is calculated by the change of price and volume. The volume then acts as a measure of price change - the larger the coefficient (or volume), the more the indicator shows the greater influence of price movements over that period.

When the value of this indicator increases, the accumulation (buying) of security also increases, along with the increase in trading volume is an upward trend. Conversely, when the indicator is down, the security is being distributed (sold out) more, leading to a downtrend.

The divergence between the Accumulation / Distribution indicator and the stock price suggests that there will be price movements coming. As a rule, at Divergence, the movement is in the same direction as the indicator's trend. So if the indicator is rising and the security's price is falling, you can expect a reversal to happen.

2. On Balance Volume indicator

On Balance Volume (OBV) technical indicator - is a momentum indicator showing the relationship between trading volume and price change. The mechanism of this indicator is quite simple: if today is a bullish day, the volume is added to the OBV value of the previous day and vice versa, the volume is subtracted from the OBV value of the previous day if the day Now is the discount day.

Analysis of the On Balance Volume indicator is based on the theory that the OBV will change before the price changes: investment cash flows will flow into stocks as the OBV rises. When investors focus on that security, both the On Balance Volume indicator and the security will "surge".

If the price moves before the OBV, the "non-confirmation" situation will happen. Non-confirmation may occur at bull market tops (when the price goes up before or without an increase in OBV); or at market bottoms, the price falls (when prices fall before or without a drop in OBV).

3. Money Flow Index indicator

Technical indicator MFI (Money Flow Index - an indicator of money flow) will let you know the amount of money in and out when investing in a security during a period of observation. In other words, the MFI indicator shows how much investors prefer a particular type of stock or currency.

The construction and analysis of this index is very similar to the RSI (Relative Strength Index), but RSI is related to the stock price and the MFI is the relationship to the volume of securities traded. When analyzing money flow based on the MFI indicator, you need to pay attention to the following issues:
  • The divergence between the indicator and the price movement. If the price rises while the MFI falls (or vice versa), it is very likely that the price will reverse;
  • If the MFI goes above 80 or below 20, the market is likely to top or bottom. You should sell when the MFI is above 80 and buy when the MFI is below 20 or sell when the MFI shows a downtrend and buy when the MFI is up if a short trade.