Stock Exchange and Market Analysis
Technical Analysis (26)
The stock technical indicator ADO (Accumulatin / Distribution's Oscillator) is part of the analysis of short-term technical indicators , mainly used judged the strength of the stock market or push up the tug of buyers and sellers , by intraday the relative relationship between the opening price , the closing price , and the highest and lowest prices reflects the strength of the stock market buying momentum and the opportunity to push up the stock price in the future . The candlestick chart derived from ADO can be used as the long-term growth and long-term in the medium and long term. Discriminating indicators ( Figure 1 ).
Figure 1 The candlestick chart with volume, ADO and stochastic KD line
The calculation principle of the ADO indicator is very simple . It mainly calculates the percentage of two rising force to the difference from the lowest price to the highest price. One force is the lowest price from the intraday price to the closing price. Another is the open price from the intraday price to the high price.The formula is as follows :
ADO t
= ( BP t + SP t ) / ( 2 * ( H t – L t )) * 100
= ( 0.5 * BP t / (H t - L t ) + 0.5 * SP t / (H t – L t )) * 100
Where :
BP t = H t - O t
SP t = C t – L t
H t : the highest price on the day of t
L t : the lowest price on the day of t
O t : opening price on the day of t
C t : the closing price of the day of t
BP (Buying Power) after the stock market opened , multiparty push up stock prices to the highest point of strength .SP (Selling Power) , compared with the stock long as the support plate is bound to move up from the lowest point to close the show of force . Compared to the difference of the highest and lowest price of the day , the proportion of these two stock forces ( ie ADO) can be used to represent the strength of the multiparty buying strength . According to the above definition, the ADO indicator value will be similar to the RSI indicator ranged in 0~100 between swing . when the maximum value is equal to the opening price , closing price is equal to the lowest , the so-called lowest closing open top , as called no vertical hatched candle ( green bars ), the ADO will be equal to 0, heavy selling pressure is weak buying low . when equal to the lowest opening price , closing price is the highest price , which is the lowest the highest closing the opening , without the top hatched candle (Red bars ), the ADO is equal to 100, buying a Roll . Observation Figure I shows the candle stick graph , the presented green bar represents the day of opening lower , (on BP + the SP) <(H t - L t ), the ADO will be less than 50, which means that the buying power is insufficient , the longer the green bar of the shadow line , the closer the ADO is to zero . The line showing the red bar's positive line indicates that the day is lower and lower , (BP + SP) > (H t – L t ), ADO will be more than 50, which means strong buying power , the longer the red bar of the positive line , the closer ADO is to 100.
Since the shadow lines alternate frequently on the candlestick diagram , we can understand that the attributes of ADO must be swaying up and down , and the reference is relatively reduced . It can only be used as a short-term auxiliary tool . If you want to apply it to the medium-long line , you can further ask for 5 days to observe changes in their weekly average longer period . and then as the weekly average whichever 3 days smoothed average K value , and take K values 3 smoothing daily average D value , will be able to traditional stochastic KD line principle. It is used in the stochastic KD trend graph of ADO ( Figure 1 ). Since the KD value has been smoothed , it can filter out the noise that is often misjudged by the short line , so when KD value of the gold cross presented , on behalf of the stock is about to bottom out , and K values continue to break up the value 50, expressed bull trend is established , and vice versa when the KD values in a death cross , the stock is about to head for the reversal , while the K value continues down below 50 at the time , it indicates that the bearish trend is established .
While the above is a general rule out of stock , but due to the ADO index calculation principle is quite simple , more suitable for use as a short-term operation of the analysis , if you want to use it as the long-term indicator , preferably as described above to introduce stochastic KD analysis , and due to different attributes stocks, it is better to observe the stock price trend chart of the subject matter for at least one year and then make appropriate corrections against the technical indicators . Finally, in order to facilitate the readers to use the ADO index , the author still adopts the spreadsheet of the public ( free of charge ) software LibreOffice and Juyang as modeled (template), continue to produce a similar Excel format (* .ods) analysis of samples for the reader :
Template26.ods
This sample addition to providing "historical stock" spreadsheet ADO and similar stochastic KD reference index value outside , providing second spreadsheet candlestick graph , volume and ADO correlation trendline for the reader . if left error, please also feel free to correct me . Thank you !
In addition , the author made EXCEL spreadsheet for various indicators ( moving average , RSI, BIAS, stochastic KD line, William indicator, MACD, CDP and Bollinger band) for stock analysis , and further produced candlestick charts and other technical indicators on the same chart , interested readers can refer to Ref.1.
Reference (Ref):
1. Investment Financial Notes - Stock Technical Analysis
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