We are enhancing our services and adding new studies (indicators) to our charts…
OBV, PPO and ATR
New charts have been installed on our server.
OBV, PPO and ATR has been added to the list of technical studies available with our charts.
The new chart version is 7.2.7.
About On Balance Volume (OBV)
The OBV calculations are simple. The On Balance Volume is cumulative total of the negative and positive volume, where the negative volume is volume during the price decline and positive volume is volume during the price advance.
The On Balance Volume could be used as confirmation indicator as well as a tool to predict coming trend reversal.
If the OBV line moves along with the price MA (Moving Average) technical analysis tells that the OBV confirms the up-trend. At the same time the OBV decline during the price drop would confirm a down-trend. The divergence of the SBV movement and price trend could be used to anticipate possible changes in the market trend. The declining OBV during the price advance may indicate possible beginning of a new down-trend, while advancing OBV during the price decline could indicate a possibility of begging a new up-trend.
Chart 1: Nasdaq 100 index - On Balance Volume (OBV).
About Average True Range (ATR)
The ATR indicator could be very useful in trading systems to define stock market periods of high volatility. From the chart above you may see that since August 2007 the Nasdaq 100 index has been 2-3 times more volatile. It means that from that month the Nasdaq 100 price changes its direction 2-3 time faster then before. As a result, technical indicators setting used in the period prior August 2007 may fail to generate signals after that month. The old indicators setting may simply open and close a trade when it is already too late.
As you may see the ATR helps identify high volatile period. In August 2007 by having ATR data, proficient in technical analysis trader would adjust the indicators to be more sensitive and faster react on the price changes.
Chart 2: Nasdaq 100 index - Average True Range (ATR).
About Percentage Price Oscillator (PPO)
The PPO is a percentage representation of MACD and all principles of technical analysis used with MACD could be applied to PPO and PPO would generate signals similar to the signals generated by MACD. As a result PPO is widely used with PPO-histogram which are analyzed in the same way as MACD histogram.
The same as with MACD the PVO could be used to generate signals from:
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Divergence
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Moving Average Crossover
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Centerline Crossover
The advantage of the PPO over MACD is that because PPO is percentage based it allows comparing the PPO of various securities.
Chart 3: S&P 500 index - Percentage Price Oscillator (PPO) and MACD.
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