Relative strength index
First, the principle of RSI
According to the strength index theory, any sharp rise or fall of the market price is between 0- 100. According to the normal distribution, it is considered that RSI values are mostly between 30 and 70. Usually at 80 or even 90, the market is considered to be overbought, and the market price will naturally fall back and adjust. When the price falls below 30, it is considered oversold and the market price will rebound.
Second, the advantages of RSI measurement method
The calculation of RSI generally takes 14 days as the cycle, taking the rise as the sum of the buyer's strength and the fall as the sum of the seller's strength, and judging the future trend of the exchange rate is based on the comparison of the two forces.
Five different uses of RSI:
1) Vertex and bottom–30 and 70 are usually oversold and overbought signals.
2) Deviation-When market conditions hit a new high (new low) but RSI did not hit a new high, this usually indicates that the market will reverse.
3) Support level and resistance level-RSI can show support level and resistance level, and sometimes it can reflect support level and resistance level more clearly than the price chart.
4) Price trend patterns-Compared with the price chart, the price trend patterns such as double top and head-shoulder top are clearer on RSI.
5) U-turn-when the RSI breaks through (exceeding the previous high or low), it may mean that the price will suddenly change, just like other indicators. RSI needs to be used in conjunction with other indicators, and cannot generate a signal alone. The confirmation of price is the key to determine the entry price.
The variation range of RSI is 0- 100, and the strength index values are generally distributed in 20-80.
80- 100 sells very strongly.
Top 50-80 buyers
20-50 weak wait and see
0-20 Very weak buy
Here, "extremely strong", "strong", "weak" and "extremely weak" are only relative analytical concepts.
[Edit this paragraph] Use RSI deviation to judge the top.
Relative strength index (RSI) is one of the technical indicators. According to the strength index theory, any market price fluctuation is between 0- 100. According to the normal analysis, it is considered normal that the RSI value changes between 30 and 70. 80-90 thinks that the market is overbought, and the market price naturally faces downward adjustment. At 10-20, it is considered that the market has oversold, so the market price naturally faces stabilization and recovery. However, investors may find that sometimes the RSI is above 80 and the stock price is still rising, so it is not reliable to judge the top only by whether the stock price is overbought or not. So we should look for other laws to judge.
Generally speaking, technical indicators tend to deviate from the top, and RSI indicators are no exception. The top deviation of RSI indicator means that the stock price hit a new high in the upward trend, and then the RSI indicator also hit a new high above 80, and then the stock price fell to a certain extent, and RSI also followed the downward trend.
Now adjust. However, if the stock price rises again and exceeds the previous high point, the RSI will continue to rise with the stock price and will not exceed the previous high point, resulting in the top deviation of RSI. After the top deviation of RSI, it is more likely that the stock price will peak.
The reason why RSI's top deviation is a sign that the stock price peaks is mainly because when the dealer pulls up the shipment, in order to make a quick shipment, his pull-up action is bound to be rapid and violent, and the shipment action will last for a long time and space. This feature determines that the dealer has repeatedly raised the stock price. However, because the RSI index mainly reflects the strength of the market, this trend of no longer being strong will undoubtedly lead to the decline of RSI. Therefore, once the dealer's shipping trend appears, RSI usually falls back to a large extent, thus forming a top deviation trend. This phenomenon is also true in KDJ and other indicators.
After finding the deviation trend at the top of the indicator, investors should make a comprehensive judgment based on the market atmosphere and disk situation at that time. If the market is still in a relatively bullish stage, it is more likely that the stock price will continue to rise, but the magnitude and intensity will be significantly weaker than in the previous period. This is mainly because this rise is an upward trend stimulated by market sentiment, rather than a substantial promotion of trading volume, so the rise cannot last long.
[Edit this paragraph] Special analysis method of ]RSI
First, the shape of the RSI curve
When the RSI indicator is consolidating at a high level or sideways at a low level, it is also an analytical method to judge the market and decide the buying and selling actions.
1. When the RSI curve forms a high-level inversion form such as M-head or triple-top at a high level (above 50), it means that the upward kinetic energy of the stock price has been exhausted, and the stock price may have a long-term inversion. Investors should sell stocks in time. If the stock price trend curve has the same shape, it can be confirmed. The magnitude and process of the stock price decline can refer to the top reversal patterns such as M-head or triple top.
2. When the RSI curve is at a low level (below 50) and forms a low-level inversion pattern such as W bottom or triple bottom, it means that the downward momentum of the stock price is weakened, and the stock price may build a medium-and long-term bottom, so investors can open positions in batches on dips. If the stock price trend curve has the same shape, it can be confirmed. The rising range and process of stock price can be judged by referring to the bottom reversal pattern such as W bottom or triple bottom.
3. The top inversion shape of 3.RSI curve is more accurate than the bottom shape to judge the market.
Second, the deviation of RSI curve
The deviation of RSI indicator means that the trend of RSI indicator curve is just the opposite to that of K-line chart of stock price. The deviation of RSI indicators can be divided into top deviation and bottom deviation.
(1) top deviation
When RSI is at a high level, but it has recently reached a new high, there is a trend that one peak is lower than the other. At this point, the stock price on the K-line chart has hit a new high again, forming a trend that the peak is higher than the peak, which is the top deviation. Top deviation is generally a signal that the stock price is about to reverse at a high level, indicating that the stock price is about to fall in the short term, which is a selling signal.
In the actual trend, the top deviation of RSI indicator means that the stock price hit a high point in the rising process, and the RSI indicator also hit a new high above 80. After that, the stock price fell to a certain extent, and RSI was also adjusted with the downward trend of the stock price. However, if the stock price goes up again and exceeds the previous high point to hit a new high, and RSI also goes up with the stock price rise but begins to fall back without exceeding the previous high point, this forms the top deviation of RSI indicators. After the top deviation of RSI, it is more likely that the stock price will peak and fall back, which is a relatively strong selling signal.
(2) Bottom deviation
The bottom deviation of RSI generally appears in the low-level area below 20. When the stock price falls all the way on the K-line chart, it forms a wave-by-wave trend, and the RSI line takes the lead to stop falling and stabilize at a low level, forming a trend that the bottom is higher than the bottom, which is the bottom deviation. The bottom deviation generally indicates that the stock price may rebound in the short term, which is a signal of short-term buying.
For the deviation phenomena of indicators such as MACD and RSI, in the deviation of RSI, the top deviation is more accurate than the bottom deviation. When the stock price is at a high level and the RSI is above 80, it can be considered that the stock price is about to reverse downward and investors can sell the stock in time; When the stock price is at a low level and RSI is also at a low level, it is usually necessary to confirm the bottom deviation several times.
Third, the modification of parameters.
From the practical application of RSI indicators, most investors choose day as the time period parameter, while the use of daily RSI indicators is mostly limited to a few parameters such as 6th and12nd. If we analyze the stock trend according to these short-term time parameters, the values obtained by RSI indicators are mostly between 40 and 80, and the fluctuation frequency is too complicated. In such a narrow space, it is not easy to accurately judge the market trend with RSI curve. Therefore, investors should make full use of all kinds of short, medium and long-term daily parameters provided by various stock market analysis, and combine the stock market theories such as K-line and moving average to comprehensively judge the stock trend.
CCI index, also known as homeopathic index, or commodity channel index in English, was developed by Donald, an American stock market analyst. Founded by Donald R.Lambert in 1980s, it is a short-term and medium-term index to guide stock market investment.
Part II: Short-term homeopathic indicators.
First, the principle of CCI index
CCI indicator is an overbought and oversold indicator. The so-called overbought and oversold index, as the name implies, means that the ability of the buyer has been exceeded, and the number of people buying stocks has exceeded a certain proportion. Then, at this time, the stock should be sold in reverse. "Oversold" means that the seller oversold the stock. When the number of people selling stocks exceeds a certain percentage, they should buy stocks instead. This is a normal market. However, if the market is extremely strong, the overbought and oversold indicators will suddenly lose their direction, the market will continue to move forward, and the masses seem to lose control. CCI index provides different views on the disorderly behavior of the original price. This will help investors to better judge the market, especially those abnormal prices that have soared and plummeted in the short term.
Second, the operating range of CCI indicators
This indicator is a special indicator to measure whether the stock price has exceeded the normal distribution range, and it belongs to a special overbought and oversold indicator, fluctuating between positive infinity and negative infinity. But it must be centered on 0, which is also different from the index that fluctuates between positive infinity and negative infinity. CCI mainly measures the variability outside the normal range of prices, and also applies to futures commodity and stock prices.
Among the commonly used technical analysis indicators, CCI (homeopathic indicator) is the most peculiar one. CCI index varies between positive infinity and negative infinity, and there is no limit of operating area, but it has a relative technical reference area:+100 and-100, which is different from all other indexes without operating area limit. According to the general idea of index analysis, the operating range of CCI index can also be divided into three categories: overbought area above+100, oversold area below-100, and shock area between+100 and-100. However, the technical significance of CCI index running in these three regions is related to the definitions of overbought and oversold of other technical indicators. First of all, in the range of+100 to-100, this index is basically meaningless and cannot provide many clear suggestions for the operation of the market and individual stocks, so it is generally invalid. This also reflects the characteristics of this indicator-CCI indicator is specially designed for extreme situations, that is, under normal market conditions, CCI indicator will not work. When CCI scans the abnormal fluctuation of the stock price, it must make a decisive decision, the outcome is immediately known, and the gambling loss must be settled immediately.
Third, the practical application of CCI indicators
The practical application of CCI index mainly focuses on the judgment of CCI index interval, the deviation of CCI index, the trend of CCI curve and the shape of CCI curve.
(A) the determination of CCI index interval
1. When CCI indicator breaks through the+100 line from bottom to top and enters the abnormal range, it indicates that the stock price is out of normal and enters the abnormal fluctuation stage, and short-term and medium-term stocks should be bought in time. If there is a large trading volume, the buy signal is more reliable;
2. When CCI indicator breaks through the-100 line from top to bottom and enters another abnormal range, it indicates that the consolidation stage of stock price has ended and will enter a long bottom-seeking process, and investors should wait and see mainly by holding money;
3. When CCI index breaks through the line of+100 from top to bottom and re-enters the normal range, it indicates that the rising stage of stock price may end and it will enter a relatively long consolidation stage, and investors should sell stocks on rallies in time;
4. When the CCI indicator breaks through the-100 line from bottom to top and re-enters the normal range, it indicates that the bottoming stage of the stock price may end, and some will enter the consolidation stage, and investors can buy stocks on dips in small quantities;
5. When CCI indicator runs in the normal range from+100 line to-100 line, investors can use other overbought and oversold indicators such as KDJ and W% R to judge.
(b) Deviation from CCI index
The deviation of CCI index means that the trend of CCI index curve is just the opposite to that of K-line chart of stock price. The deviation of CCI index can be divided into top deviation and bottom deviation.
1. When the CCI curve is at a high position far away from the+100 line, but after hitting a recent high point, the CCI curve instead forms a trend that one peak is lower than another, and the stock price on the K-line chart hits a new high again, forming a trend that one peak is higher than another, which is the top deviation. Top deviation is generally a signal that the stock price is about to reverse at a high level, indicating that the stock price is about to fall in the short term, which is a selling signal. In the actual trend, the top deviation of CCI indicator means that the stock price hit a high point in the rising process, and CCI indicator also hit a new high above the-100 line. After that, the stock price fell back to a certain extent, and the CCI curve was also adjusted with the downward trend of the stock price. However, if the stock price goes up again and exceeds the previous high point to hit a new high, the CCI curve goes up with the stock price rise but begins to fall back without exceeding the previous high point, which forms the top deviation of CCI indicators. After the CCI indicator deviates from the top, it is more likely that the stock price will peak and fall back, which is a strong selling signal.
2. The bottom deviation of 2.CCI generally appears in the low-level area far from the-100 line. When the stock price falls all the way on the K-line chart, it forms a wave after wave trend, and CCI curve takes the lead to stop falling and stabilize at a low level, forming a trend that the bottom is higher than the bottom, which is the bottom deviation. Bottom deviation generally indicates that the stock price may rebound in the short term and is a short-term buying signal. Like the deviation of MACD, KDJ and other indicators, the accuracy of top deviation is higher than that of bottom deviation in CCI indicators. When the stock price is at a high level and CCI deviates from the-100 line, it can be considered that the stock price is about to reverse downward and investors can sell the stock in time; However, when the stock price is at a low level and CCI is far from the low level below the-100 line, it is usually necessary to confirm the bottom deviation many times, and investors can only make strategic positions or short-term investments.
(C) the trend of CCI curve
1. When the CCI curve breaks through the+100 line and enters the abnormal range, it indicates that the stock price begins to enter a strong state, and investors should buy stocks in time;
2. When the CCI curve breaks through the+100 line and enters the abnormal range, as long as the CCI curve keeps running upwards, it indicates that the stock price is still firm and investors can hold shares all the way.
3. When the CCI curve is in the abnormal range above the+100 line, and it starts to turn down away from the+100 line, it indicates that the strong state of the stock price will be difficult to maintain, which is a strong turning point signal of the stock price. If the short-term increase in the previous period is too high, it can be confirmed. At this point, investors should sell stocks on rallies in time;
4. When the CCI curve is in the abnormal range above the+100 line and falls away from the+100 line, it shows that the strong state of the stock price has ended, and investors should mainly sell stocks on rallies;
5. When CCI curve breaks through the-100 line and enters another abnormal interval, it shows that the weak state of stock price has been formed, and investors should wait and see mainly by holding money;
6. When the CCI curve breaks through the-100 line and enters another abnormal interval, as long as the CCI curve runs all the way down, it means that the stock price is still weak and investors can wait and see all the way;
7. When the CCI curve breaks through the-100 line and enters another abnormal interval, if the CCI curve runs in the oversold area for a long time and then starts to turn around, it means that the short-term bottom of the stock price has been initially found, and investors can open a small amount of positions. The longer the CCI curve runs in the oversold area, the more you can confirm the short-term bottom.
(D) the shape of CCI curve
1. When the CCI curve is far away from the high position above the+100 line, if the trend of CCI curve forms a top inversion form such as M prefix or triple top, it may indicate that the stock price will turn from strong to weak, and the stock price is about to plummet, so the stock should be sold in time. If the curve of stock price also presents the same shape, it can be confirmed that its decline can be judged by the shape theory of M head or triple top;
2. When the CCI curve is far away from the low position below the-100 line, if the CCI curve has a bottom inversion shape such as W bottom or triple bottom, it may indicate that the stock price will turn from weak to strong, and the stock price will rebound upward soon, so a small amount of stocks can be absorbed on dips. If the stock price curve also appears in the same form, it can be confirmed that its increase can be judged by W bottom or triple bottom's morphological theory;
3. The accuracy of M head and triple head in 3.CCI curve is greater than that of W bottom and triple bottom.