price and volume analysis

parackrama · 1 price and volume analysis Tue Nov 01, 2011 1:40 pm

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how do we analyze price and volume properly, need help on this.

arrowms · 2 Re: price and volume analysis Tue Nov 01, 2011 2:11 pm

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Price - candlestick chart --http://www.candlestickforum.com/PPF/Parameters/16_332_/candlestick.asp

Volume - RSI Chart---------------------- 0 - 20 - Over sold
------------------------------------------20 - 60 (Upward trend) - Buy @ 50
------------------------------------------Above 70 Over bought

{ Please note - I am not professional analyst, Just look after my stock }

sriranga · 3 Re: price and volume analysis Tue Nov 01, 2011 2:54 pm

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May be this link will help you to certain extend (hope so)
http://forum.srilankaequity.com/t11476-basic-volume-theory?highlight=volume

rijayasooriya · 4 Re: price and volume analysis Tue Nov 01, 2011 5:53 pm

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arrowms wrote:Price - candlestick chart --http://www.candlestickforum.com/PPF/Parameters/16_332_/candlestick.asp

Volume - RSI Chart---------------------- 0 - 20 - Over sold
------------------------------------------20 - 60 (Upward trend) - Buy @ 50
------------------------------------------Above 70 Over bought

{ Please note - I am not professional analyst, Just look after my stock }

In the process of calculation of RSI does not consider volume.There is a some sort of smoothing for sharp price increases.So I do not think it is a good volume indicator.
RSI=100-(100/1+RS)
RS=average of x days' up closes/average of x days' down closes.
In a normal market:-
70 overbought
30 oversold
In a bear market:-20 oversold
In a bull market:-80 overbought
50 can be taken as buy or sell signal.But crossing back under the 70 line can be taken as sell signal and crossing back over the 30 line can be taken as buy signal.

arrowms · 5 Re: price and volume analysis Tue Nov 01, 2011 6:00 pm

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rijayasooriya wrote:
In the process of calculation of RSI does not consider volume.There is a some sort of smoothing for sharp price increases.So I do not think it is a good volume indicator.
RSI=100-(100/1+RS)
RS=average of x days' up closes/average of x days' down closes.
In a normal market:-
70 overbought
30 oversold
In a bear market:-20 oversold
In a bull market:-80 overbought

@rijayasooriya
I thought Oversold/Overbought means the volumes of shares.
Does it mean the price is Over/Under???? or what????
anyway thx for update

rijayasooriya · 6 Re: price and volume analysis Tue Nov 01, 2011 6:24 pm

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arrowms wrote:

rijayasooriya wrote:
In the process of calculation of RSI does not consider volume.There is a some sort of smoothing for sharp price increases.So I do not think it is a good volume indicator.
RSI=100-(100/1+RS)
RS=average of x days' up closes/average of x days' down closes.
In a normal market:-
70 overbought
30 oversold
In a bear market:-20 oversold
In a bull market:-80 overbought

@rijayasooriya
I thought Oversold/Overbought means the volumes of shares.
Does it mean the price is Over/Under???? or what????
anyway thx for update

Well I am not an expert but what I have understood is,overbought/oversold(extremities of oscillator) does not relate to volumes, it means current price move/trend has gone too far too fast so there may be a correction or consolidation.Hope u got it.

smallville · 7 Re: price and volume analysis Tue Nov 01, 2011 9:22 pm

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RSI indicates strength of the direction so when its at 30 we cant really say whether the counter is heading for a run.. it has to be measured with volumes to figure out if there's anything to happen..

Stochastics is the best indicator to indicate Oversold/Overbought regions..
20-30 - Oversold and both signals are heading up means the price is moving up but if cannot say whether it can turn back around 50...
80 and above - over bought, selling time..

rijayasooriya · 8 Re: price and volume analysis Wed Nov 02, 2011 12:05 am

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smallville wrote:RSI indicates strength of the direction so when its at 30 we cant really say whether the counter is heading for a run.. it has to be measured with volumes to figure out if there's anything to happen..

Stochastics is the best indicator to indicate Oversold/Overbought regions..
20-30 - Oversold and both signals are heading up means the price is moving up but if cannot say whether it can turn back around 50...
80 and above - over bought, selling time..

Yes Stochastic is good momentum indicator.

hirankb · 9 Re: price and volume analysis Wed Nov 02, 2011 12:30 am

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RSI has no volume component. only the RELATIVE STRENGTH OF THE PRICE MOMENTUM. Normally it is the simple avergae of 14 days of trading. ( the X in the above calculation is 14. but in highly volatile markets it should be 7 ).

Stochastic (fast) fails misserably in a trending market, which again is a price momentum indicator which is ideal for sideways market.. this gives prominence to closing price in the days range.

one of the best Price with volume indicators is the Chaikin's money flow index(CMF) . Actually this indicates cash flow in and out of a counter. if +1 it means the closing price has been the days high for 20 straight days and -1means the opposite. the normal range is +.05 to -.05. if the line crosses zero from below if is a very good buy signal and vice versa. if the price trend and the CMF trend is diverging ( moving in opposite directions , it is a clear indication of an impending reversal.but make sure at least 3 indicators confirm your action. MACD, RSI , CMF , MACD of volume are very good for CSE. make few trades based on these and fine tune the smoothing period for each counter. YOU WILL GAIN more than 75% of the time. I do.

arrowms · 10 Re: price and volume analysis Wed Nov 02, 2011 9:36 am

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I was totally mistaken the theory. I used Candlestick, MACD and RSI in DFN.
Considered RSI is the volume and Candle as price and MACD as movement.
But i made some profit last few months. May be Luck Very Happy