The analysis of the market is mainly divided into fundamental and technical analysis. Although it is timing
key to succeed in Margin trading, methods of technical analysis are also indispensable.

Technical analysis is a technique that aims to predict the future trend of market price, hold the market trend
with price (including turnover and execute price), and studies market fluctuation with chart as the principal
means.
Next, we will briefly introduce some concepts about technical analysis and technical indicators uses.

To make a technical analysis, we have to know the concept of “trend” first.In a general sense, trend is the direction where the market goes. More concretely and exactly speaking, market usually won’t develop straightly towards one direction. Market movement is characterized by zigs and zags. There are obvious “peaks” and “troughs” like waves in market movement. The direction formed bythese peaks and troughs are called market trend.An uptrend is a series of peaks and troughs in an upward line; a downtrend is a series of peaks and troughs in a downward line; a horizontal trend is a series of peaks and troughs extending horizontally.

A very clear rising trend,also called bull market,an opportunity to buy.

A very clear falling trend,also called bear market, an opportunity to sell.

No clear rise or fall, hover around a certain range.

Moving average is a value obtained by dividing the sum of close price over a time period by this specified period. Moving average includessimple moving average , exponential moving average , Weighted Moving Average etc. which can be used independently to calculate other technical indicators. Moving average is the basis of chart analysis and one of the most famous analysis tools among all technical analysis indicators.

Granvile Rules

Granvile Rules is the most classic method of using moving average. The Rules emphasizes position relation between the moving average and actual prices and summarizes buy and sell signals respectively into four different patterns.

- It is a buy signal when the moving average turns from long-term decline to level and shows a sign of moving upward to the right but the FX rate crosses the moving average from below.
- It is a buy signal when the FX rate drops down below the moving average but the moving average will continue to move upwards in a short term, which indicates a temporary adjustment in the market.
- It is a buy signal when the FX rate remains above the moving average, and despite drops, it rises again before falling below the upward moving average.
- It is a buy signal when the FX rate fluctuates below the moving average and suddenly slumps far from the moving average, which is called bias, but the FX rate is likely to go upward towards the moving average.

Buy Signal

- It is a sell signal when the moving average gradually turns from an uptrend to level or decline, the FX rate breaks through the moving average from above, and the selling climax gains weight.
- It’s better to sell when the FX rate breaks through the moving average from below but the moving average still keeps a downtrend.
- It is a sell signal when the FX price bounces back but is still below the moving average while the moving average shows a downtrend from level.
- It’s better to sell when the FX rate rises above the moving average and moves further and further from the moving average (FX rate continues to rise sharply), which indicates it’s profitable to buy positions in the recent period and there may be profit taking at any time.

Sell Signal

Technical analysis is mainly classified into two types by method One is the trend-type analysis which determines the market fluctuation direction and follows the trend to take the advantage of an opportunity; the other is, oscillation–type analysis which guesses and estimates opportunities to buy and sell by analyzing strong/weak trends and extreme market conditions like overbought and oversold conditions. Generally speaking, the trend-type analysis is better for medium and long-term analysis, while the other type is more suitable for short-term prediction.

Trend type

Bollinger Bands - BOL

Bollinger Bands is a trend-type analysis invented by John Bollinger. Bands are placed evenly above and below a moving average to reflect maximum volatility. In most cases, the bands subsume price fluctuation.

Calculation method (n-day for calculation of days and two times of standard deviation is adopted for upper and low band)

Middle band = n-day simply moving average(SMA)

According to statistical method, when the market is in a normal
distribution, the price volatility within bands is:

Standard deviation
x1→ 68.27％

Standard deviation x2→ 95.45％

Standard deviation x3→ 99.73％

Chart

Application rule

The essential point is that the bands widen when volatility increases and narrow when
volatility decreases.

When the band width and keeps unchanged at a certain level, the
market is in a state of basebuilding. It shall be particularly noted when the band widens
(i.e. when volatility increases and trend changes). At this time, the market trend
changes, so good news will result in price decrease while good news will cause price
increase.

Bollinger Band is normally calculated by 2σ (standard deviation x2). The
line in the middle is called the Middle Band. It is a moving average that suggests market
trend when it moves upwards or downwards. The line above it is the Upper Band. It is
calculated by adding up the moving average value and 2σ. The line below the middle band is
the Lower Band. It is calculated by subtracting 2σ from the moving average value.

- Buy when the price penetrates the upper band (＋２σ), suggesting steep price rise
- Sell when the price penetrates the lower band (-２σ), suggesting sharp price decline

Contrary to the above moves following the trend, there are also moves against the trend.

- Sell as overbought when the price penetrates the upper band (＋２σ)
- Buy as oversold when the price penetrates the lower band (-２σ)

Besides, there is also trend trading in uptrend and contrarian trading during basebuilding and in downtrend. Other methods are:

- Buy when the price crosses ＋１σ and sell when it crosses ＋１σ
- Buy when the price crosses －３σ downward
- When the price crosses the upper band (＋２σ), it indicates start of an uptrend
- When the price crosses the lower band (-２σ), it indicates start of a downtrend

Typical values for the time parameter are 13, 25 and 26 days. Sometimes, 9, 14, 20 and 50 are also used as the time parameter. The band width is normally the value of standard deviation x2 (±２σ).

Merit and demerit of Bollinger Band

Merit: It can forecast price band with changes of volatility (standard deviation) added
in the chart.

Demerit: When the market changes abruptly, the price will deviate from
the band significantly, so Bollinger Band alone cannot determine the reverse trend.

Exponential Moving Average - EMA

EMA refers to aggregate weighted average. It is not an average value of a certain period but rather a weighted average that reflects all data in the calculation result.

Calculational formula

SMA(n) = n-day simple moving average

[ n is the number of days used for calculating the simple moving average of the 1st day]

Chart

MACD

MACD, the abbreviation of Moving Average Convergence and Divergence, is a technical indicator that studies and determines the range of FX volatility (time to buy and sell), cross modal and bias based on similarities and differences of EMA as well as signaling functions of convergence and divergence of two EMAs to determine where the market turns.

Calculation method

The value of n in EMA(n)may be set as any value.

Bar refers to parts
expressed in a histogram.

Chart

(Green Line：MACD Red Line：Signal Line Grey：Histogram)

Application rule

The standard interpretation is to buy when the MACD line crosses up through the signal line, or sell when it crosses down through the signal line. And when both MACD line and signal line cross above zero in the upwards move or both cross down zero in the downwards move, then the signals of the indicator are really true and reliable.

Merit and demerit of MACD

Merit: Of trend indicators that study trends and oscillators that measure the range,
there are many other types besides MACD which offers the best of both. As it uses EMA,
compared with SMA, it can reflect sudden price fluctuation on the Chart more
rapidly.

Demerit: When the exchange rate is in a clear cyclical fluctuation, MACD is
able to give its full play to tops and bottoms, but it is not that effective in other
trends. According to the application rule of MACD, in most cases, the price reverses when
MACD and the signal line cross near the top and bottom, but such a case rarely happens. It
is useless even when crossover occurs in areas not near the top or bottom. Another demerit
of MACD is that when the market is in a bullish correction and the exchange rate stands in
a fix, it’s likely to produce false signals.

Parabolic - SAR

SAR is a trend-following indicator developed by Wilder. With two parabolic SARs (Stop and Reverse) formed by points, the stop loss point is adjusted at all times for observation of the buy/sell point. Because SAR is parabolic, it is also called a parabolic indicator.

Calculation method

EP (extreme point) = The highest of long position

Or the lowest of short
position

AF (acceleration factor) = Starting at 0.02 (AF increases by 0.02 each time the extreme point makes a new high/low. AF can reach a maximum of .20)

Chart

Application rule

As shown in the above chart, the parabolic SAR is used to calculate the time to buy/sell.
When the trend reserves, SAR will reverse. Recurrence of reversal leads to constant
fluctuation of SAR. When a reverse occurs, the price and SAR will cross at the point, so
it’s very easy to tell.

Trading methods: 1. It is time to buy when the downward curve
meets the upward candle line. 2. It is time to sell when the upward curve meets the
downward candle line. Other ways you can use flexibly are: 1. Continue to hold the long
position when the curve is below the candle line. 2. Continue to hold the short position
when the curve is above the candle line.

If AF is set too high, the curve and the price
fluctuation will be too close, thus resulting in frequent false signals. If AF is set too
low, the curve will be smooth with less false signals, thus causing delay of signals. The
initial AF is often set at 0.02, but since price fluctuation differs for different
currency pairs, so it cannot be generalized.

Features of Parabolic

The parabolic SAR can enlarge profits if the market has a trend, but it will lose its effect if the market has no trend and will cause earlier stop loss. If one can fully understand features of the parabolic SAR and use it in combination with other technical indicators, its functions will be brought into its full play.

Simple Moving Average - SMA

Simple Moving Average (SMA) means simple averaging of close prices over a given period. The generally mentioned moving average refers is an SMA.

Calculation formula

C is close.

SMA(n) ＝ Simple moving average over n days

Chart

Weighted Close - WC

Weighted Close, as the name suggests, is an indicator that weight close prices of some periods to eliminate extremes. WC is often used together with moving average.

Calculation formula

Chart

Application rule

It is a buy signal when the Weighted Close crosses the moving average from below, or a sell signal when the Weighted Close breaks below the moving average. It can often be observed in the Chart that the moving average crosses the candle line but doesn’t cross the Weighted Close.

Weighted Moving Average - WMA

Weighted Moving Average , or WMA, means that the closer to the current close price. more weight it will take up, which otherwise makes WMA much closer to the actual price than SMA

Calculation formula

C is close price.

WMA(n) ＝ Weighted moving average over n days

Chart

Bollinger Bands - BOL | Exponential Moving Average - EMA | MACD |

Parabolic - SAR | Simple Moving Average - SMA | Weighted Close - WC |

Weighted Moving Average - WMA |

Statistical type

Average True Range - ATR

Average True Range (ATR), invented by Wilder, is an indicator used for studying and determining the range in the market.

Calculation method

The true range is the greatest of the following:

- The difference between the day high price and the day low price
- The difference between the previous close price and the day high price
- The difference between the previous close price and the day low price

The n value of days of EMA refers to 14 days.

Chart

Application rule

ATR is a technical indicator of price volatility. When the value approaches 0, it suggests the volatility is declining and there will be wild fluctuation in the market. As ART cannot indicate the market trend, it is suggested that ART be used together with other indicators.

Chaikin Volatility - CV

Developed by Marc Chaikin, Chaikin Volatility, CV for short, is a technical indicator that reflects price volatility by measuring the difference between the high and low prices over a given period. Although similar toAverage True Range Chaikin Volatility doesn’t consider the function of gap. Chaikin Volatility can bring out better effects when used together withmoving average（ＳＭＡ，ＥＭＡ、ＷＭＡ） and Envelopes .

Calculation method

CV=Chaikin Volatility

EMA[H-L]=EMA
of price spread

EMA(n)[H-L]＝ｎ日EMA of price spread n-day ago

The EMA of price spread is the value obtained by exponentially weighting the spread between the high and low prices over a given period.

Chart

Application rule

- When the price rise pattern is broken and the market enters an state of basebuilding, the CV curve is at the top (high-level position).
- When the basebuilding or interval is broken, the CV curve is normally at the bottom (low-level position).
- When the FX rate rises, the value of Chaikin Volatility will rise accordingly.
- When the FX rate is about to reach the top, accelerated rise will occur. When the market weakens, the possibility of a reverse trend increases accompanied by a rapid decline.

Detrended Price Oscillator - DPO

Detrended Price Oscillator (DPO) is, just as its name implies, detrended oscillator which eliminates disturbance of a long-term trend to price fluctuation by deducting previous moving average value so as to make it easier to find out short-term price fluctuation and overbought and oversold levels. The purpose of the indicator is to capture the top and bottom formed in short-term price fluctuation.

Calculation method

SMA(n) = n-day simple moving average

Chart

Application rule

The application of DOP is relative to a past interval. It is a buy signal when the price
is in a low price zone, and it is a sell signal when the price is in a high price
zone.

The moving average, as it were, reflects the trend used to eliminate the
disturbance of trend on price by subtracting the moving average from the close price.
Users can set n according to needs. The greater the value, the greater trend will be
ignored, and the smaller fluctuation can be grasped. Users can set parameters based on
analysis of the target currency’s price fluctuation features and personal preferences.

Features of DPO

Although DPO is a technical indicator that attempts to eliminate the disturbance of trend, it cannot exclude violent price fluctuation. Therefore, what DPO reflects is not the market trend but the level of top and bottom prices. DOP calculates the price spread using the close price, so there are no upper and lower limits on DOP. In other words, DPO can accurately reflect conditional reaction caused by a lasting upward or downtrend. When the trend itself does not change much, however, DPO may also send false signals. From the perspective of computational logic, there is no basis for determining the top and bottom of an anti-trend.

Fast Stochastic Oscillator - FSTO

Developed by George Lane, FSTO is a tool for oscillation analysis whose basic theory is that in an uptrend, the location of the close price tends to be around the top of the price fluctuation range (trading range); on the contrary, in a downtrend, the location of the close price tends to be around the bottom of the price fluctuation range (trading range). FSTO uses two curvces, %K (fast line) and the %D (slow line). The value of FSTO is expressed as a percentage between 0 and 100 which is used to measure the relation between the recent close and the price fluctuation range (trading range) over a given period of time.Slow Stochastic Oscillator(SSTO) is an indicator of the same type with FSTO. It is a moving average of FSTO over a certain period of time.

Calculation formula

C：Recent close price

Hk：Highest value for the past k days

Lk：Lowest
value for the past k days

Chart

Application rule

It is a sell signal when the D line moves above 70% while it is a buy signal when the D
line moves below 30%. Especially when the D line crosses 80% or breaks 15%, the signal is
more reliable.

Divergence is also very important. In other words, when the D line
comes to the overbought zone above 70% or the oversold zone below 30%, it will fluctuate
to the opposite direction of price. When the D line trends upward above 70, 2 tops (double
top) form on the D line, signaling a reversal towards a downtrend; when the D line trends
downward below 30, 2 bottoms (double bottom) form, signaling a reversal towards an
uptrend.

Actual buy and sell signals have to fully meet the above conditions, and in
the meantime, the slower D line has changed direction to cross the K line. It is a strong
buy signal when the conjuncture is at the bottom, the D line strikes the bottom before
rising up, and the K line crosses the D line from below; on the other hand, it is a strong
sell signal when the conjuncture is at the top, the D line moves downward from the top and
the K line crosses the D line from above. In other words, it is a strong buy/sell signal
when the K line and the D line extend to the same direction and cross.

Merit and demerit of Fast Stochastic Oscillator

Merit: a reversal can be identified from divergence, and the buy/sell signals are highly
reliable.

Demerit: the relation between %K and %D is critical. It is risky to estimate
the market based on superficial values alone (sell above 70% and buy below 30%).

MOM

MOM is a technical analysis indicator that specially studies price fluctuation. It attempts to analyze the speed of price fluctuation, studies acceleration, deceleration and inertia in price fluctuation and change of price from a static state to a dynamic state or from a dynamic state to a static state, and produces different signals of uptrend to peak and downtrend to trough.

Calculation method

When n=1, the value is the spread with the previous day.

Chart

Application rule

The bull and bear of a buying or selling force can be measured from a rise crossing zero line and horizontal correction or a drop crossing zero line and horizontal correction. The cross of MOM and the zero line is normally taken as the critical point. It is time to buy when MOM crosses the zero line from below, and time to sell when MOM crosses the zero line from above.

Merit and demerit of MOM

Merit: Based on a very simple measurement method, MOM is a technical indicator that spots
momentum by observing price fluctuation.

Demerit: The defect of MOM is that its method
of calculation is too simple to take changes of turnover into account. It only considers
price fluctuation. As it only uses price spread to calculate price momentum, there isn’t a
basic scope. As a result, when currency types and time span changes, it cannot determine
the market trend based on the edge scale value, i.e. the “indicator value” (value on the
right side of the Chart).

Mass Index - MI

Mass Indicator is not an indicator that reflects the direction of buy/sell in the market. It mainly looks for opportunity to enter the market.

Calculation method

EMA(H-L) = Spread EMA

The spread EMA is the value obtained by exponentially weighting the spread between the high and low prices over a given period.

Chart

Application rule

The developer of Mass Indicator set the time span n as 25. When the Mass Indicator curve crosses 27 from below and then falls below 26.5, it signals contrarian trading. For example, it is a sell signal when the Mass Indicator curve crosses 27 from below and then falls below 26.5, and the trend is upward, which indicates the bullish trend is about to reverse and decline. If the trend at that time is downward, it indicates the bearish trend is about to reverse and rise, and it’s a buy signal.

Features of Mass Indicator

Unlike common technical indicators, Mass Indicator can forecast the opportunity to enter the market. In other words, Mass Indicator itself cannot predict the trend or produce buy/sell signal alone. Instead, it is used together with other technical indicators to avoid being misled by false signals.

Price Oscillator - Price

Price Oscillator is an indicator that reflects the difference between the long moving
average and the short moving average. In the Trade Square, it is the percentage of the
difference in the short moving average.

Price Oscillator is very similar to MACD. The
difference is that the users of Price Oscillator can freely choose the tims span of moving
averages, the MACD is always 12 and 26 days, and that the difference between the two
moving averages in MACD is expressed in pip.

Calculation method

The value of Price Oscillator is obtained by dividing the difference between the two moving averages by the short moving average.

Chart

Application rule

Price Oscillator reflects the difference between two moving averages. It is a buy signal when the short moving average is above the long one and Price Oscillator is positive. It is a buy signal when the short moving average is below the long one and Price Oscillator is negative. The greater the difference between the two moving averages, the greater Price Oscillator is.

Rate of Change - ROC

Rate of Change is an indicator used to measure market change speed in a given period. It is a percentage expression of MOM.

Calculation method

Chart

Application rule

The strongness of buy/sell forces can be seen when ROC keeps rising above 0 or the market is in basebuilding, or when ROC keeps declining below 0 or the market is in basebuilding. Generally speaking, it is an important buy/sell opportunity when ROC and the 0 line cross. It is a buy signal when ROC crosses the 0 line from blow; conversely, when ROC crosses the 0 line from above, it is a sell signal.

Merit and demerit of ROC

Merit: For ROC is obtained through dividing MOM by the price n days ago, it’s easy to
compare ROC values of different currency pairs.

Demerit: Although ROC always moves
within a certain range and will not extend without limits, for a financial instrument with
high price volatility, its ROC is also high, while a financial instrument with small price
volatility, its ROC is also small. Therefore, it’s hard to identify overbought and
oversold conditions.

tive Strength Index - RSI

RSI is a typical statistical technical analysis indicator developed by Wilder. RSI speculates future trend of price fluctuation based on price movement over a given period with a curve, and shows market strength according to the degree of FX increase/decrease.

Calculation method

A ： Average increase over N days

(Divide the total increase over N days
by N)

B ：Average decrease over N days

(Divide the total decrease over N days by N)

Chart

Application rule

The ordinate axis of RSI (range of strength) is set between 0 and 100. The higher RSI
extends upwards, the stronger a rising market is. Conversely, the lower RSI extends
downwards, the stronger a declining market is. RSI is considered as overbought when above
70 and oversold when below 30. When fluctuation is drastic, 80 and 20 instead of 70 and 30
are used as borderlines for overbought and oversold conditions.

Pay attention to two
conditions when using RSI. The first is when RSI and the 50% horizontal line cross which
means the strength of the long and short positions changes, thus producing a signal of
market reversal. It is considered as a signal of upward reversal when RSI crosses the 50%
horizontal line from below, or a signal of downward reversal when RSI crosses the 50%
horizontal line from above.

The second is divergence. When RSI moves above 70% or below
30%, the market trend and the RSI trend will go in opposite directions. If the price goes
up but RSI goes down, it will be considered as that the uptrend weakens. If the price goes
down but RSI goes up, it will be considered as that the downtrend weakens. A top
divergence occurs when RSI (above 70%) forms two peaks with one peak lower than another
peak while one peak corresponding to price is higher than another peak corresponding to
price. The rise of price is an action of exhaustion, which is a relatively strong sell
signal. It is a signal to start opening a position when RSI forms two ascending troughs
below 30% while the price decreases, which is the last slump or close to the last slump.

Merit and Demerit of Relative Strength Indicator

Merit: In a bullish market, RIS usually arrive at a high point before price and then
diverge from the price. The divergence is favorable for predicting the reversal point.
Based on it, traders can not only determine buy/sell positions in the medium and long run
but also identify reversal points in long-term uptrend and downtrend. For example, if the
price is increasing but RSI is declining, it will be considered the uptrend is weak and a
reversal will occur.

Demerit: Due to the design of RSI, after it enters the oversold or
overbought territory, even if the market trend fluctuates greatly, the change rate of RSI
gradually slow down and the volatility becomes smaller and smaller. Then the so-called
inaction occurs. Especially during continuous upsurge or slump, traders are likely to act
in haste. To solve the problem, other technical analysis indicators can be used as
auxiliary tools.

Slow Stochastic Oscillator - SSTO

Slow Stochasitc Oscillator eliminates extremes to improve accuracy of buy and sell signals. It is an indicator smoother than Fast Stochastic Oscillator.

Calculation formula

Calculation formula of Slow%K、Slow%D

Calculation formula of Fast%D

C：Recent close

Hk：ighest over the past k days

Lk：Lowest over the past
k days

Chart

Application rule

The application rule of Slow Stochastic Oscillator is the same with that of Fast Stochastic Oscillator

Features of Slow Stochastic Oscillator

Compared with Fast Stochastic Oscillator-FSOT ,some technical analysts prefer to use Slow Stochastic Oscillator (SSOT), because Slow Stochastic Oscillator takes the Fast %D (D line) in the Fast Stochastic Oscillator as the Slow %K (K line), and makes it smoother by means of moving average over a certain period, and takes it as the Slow %D. As a result, the slowed-down SSTO can produce buy and sell signals more accurately.

Standard Deviation - StdDev

Standard Deviation is an indicator to measure dispersion of return on investment. Higher StdDev indicates greater volatility ratio and higher risks.

Calculation formula

SMA(n)= Simple moving average over n days

n = days

- ① Calculate moving average over a given period
- ② Subtract ① from the close price of the given period
- ③ Sum up squared value of ②
- ④ Divide ③ by the number of days in the given period
- ⑤ Square root of ④ is the value of Standard Deviation

Calculation steps:

Chart

Application rule

High Standard Deviation means severe market fluctuation, which indicates that investors are in a state of active trading. Small Standard Deviation means the market is relatively quiet that indicates a wait-and-see attitude among investors with a state of inactive trading.

SWilliams %R - W%R

Williams %R, WMS％R or ％R for short, is developed by Larry Willam. Like RSI, it is an oscillator that reflects market strength and overbought/oversold conditions by analyzing the relation between high/low prices and close price over a given period to predict reversal points.

Calculation method

C: Current close

Hn: High price over the past n days

Ln: Low price
over the past n days

Chart

Application rule

Willams %R fluctuates between 0 and -100. It is considered as overbought when above -20 and oversold when below -80. When %R enters overbought or oversold territories, the market trend may not necessarily reverse at once. It’s a trading signal worth noticing only when %R enters the danger zone for the second time. In other words, special attention shall be paid to divergences in overbought and oversold territories. However, when the price stays close to the top or bottom, %R will fluctuate repeatedly around the top/bottom to produce frequent false signals, so William %R applies only to ultrashort-term trading.

Merit and Demerit of Williams %R

Merit: As %R is more sensitive than RSI, it is likely to touch the maximum 0% and the
minimum -100%, and the buy/sell signals respond fast, so it’s very effective in
identifying reverse trading of range basebuilding.

Demerit: Because the indicator is
too sensitive, it often produces false signals. Moreover, sharing the common fault of
oscillators, %R always lingers about between extremes even in a strong uptrend/downtrend,
so its reference value is limited. Due to its strong sensitivity, it would be too frequent
for traders to enter/exit the market completely following these signals. Therefore, to
reduce false signals, it’s better to use the indicator in conjunction with moving average
to get a more accurate judgment of the market trend. It is an opportunity to buy/sell when
%R sends a buy/sell signal before price and the candle line crosses the moving average.

Williams Accumulation Distribution - WAD

WAD is a technical indicator focused on divergences. Divergence in this context refers to directional difference of price and technical indicator extending in opposite directions. For example, when price makes a new high and the indicator fails to exceed its previous high, distribution is taking place, indicating a reversal conjuncture is about to occur. When price makes a new low and the indicator fails to make a new low but rises up again, accumulation is occurring, which also signals a reversal conjuncture.

Calculation method

- Calculation of True Range High and True Range Low
- True range high is the current high price or the previous close price, which one is higher
- True Range Low the current low price or the previous close price, which one is lower

- Calculation of current AD
- When current close price＞ previous close price

Current AD = Current close price - True Range Low - When current close price ＜ previous close price

Current AD = Current close - True Range High - When current close price = previous close price

Current AD=0

- When current close price＞ previous close price
- Calculation of WAD

WAD= Current AD + Previous WAD

Chart

Application rule

It is a buy signal when price goes downwards but WAD starts to rise.

It is a sell
signal when price goes upwards but WAD starts to fall.