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Glossary of Technical Analysis Terms: C




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This article is from the Glossary of Technical Analysis Terms.

Glossary of Technical Analysis Terms: C

  • Candlestick Charts:

    Method of drawing stock (or commodity) charts which originated in Japan. Requires the presence of Open, High, Low and Close price data to be drawn. There are two basic types of candels, the white body and the black body. As with regular bar charts, a vertical line is used to indicate the periods (normally daily) high to low. When prices close higher than they opened a white rectangle is drawn on top of the high-low line. This rectangle originates at the opening price level and extends up towards the closing price. A down day is drawn in black. The combination of several candles results in patterns (with names like "two crows" or "bullish englufing patern") which give insight into future price activity. For other Japanese charting approaches also see Renko and Kagi charts.

  • Chaikin Oscillator:

    The Chaikin Oscillator is created by subtracting a 10 period exponential moving average of the Accumulation/Distribution line from a 3 period moving average of the Accumulation/Distribution Line.

  • Commodity Channel Index (CCI):

    The CCI is a timing system that is best applied to commodity contracts which have cyclical or seasonal tendencies. CCI does not determine the length of cycles - it is designed to detect when such cycles begin and end through the use of a statistical analysis which incorporates a moving average and a divisor reflecting both the possible and actual trading ranges. Although developed primarily for commodities, the CCI could conceivably be used to analyze stocks as well.

    Formula: CCI=(M-MAVG)/(0.015xDAVG)

    M=1/3 (H+L+C)

    H=Highest price for a period
    L=Lowest price for a period
    C=Closing price for a period
    MAVG=N-period simple moving average of M
    DAVG= 1/n x SUMi=1 to n (ABS(MI-MAVG))

  • Commodity Selection Index:

    The Commodity Selection Index is related to the Directional Movement Index. Whereas the ADXR plot of the DMI is used to rate contracts from the longer term, trend-following point of view, the CSI is used to rate items in the more volatile short term. The Commodity Selection Index takes into account the ADXR from the Directional Movement Index, the Average True Range, the value of a one cent move as well as margin and commission requirements. The higher the CSI rating, the more attractive an item is for trading.

  • Cutler's RSI:

    Cutler's RSI is a slight variation of Welles Wilder's original Relative Strength Index. The RSI is a momentum oscillator used to identify overbought and oversold conditions by keying on specific levels, generally 30 and 70, on a chart scaled from 0 to 100. The study can also be used to detect the following:

    • Movement which might not be as readily apparent on the bar chart
    • Failure swings above 70 or below 30 which indicate reversals
    • Support and resistance
    • Divergences between RSI and price

    Cutler's RSI is calculated as follows:

    • RSI = 100 - (100 / ( 1 + RS ) )
    •  
    • RS = UPAV:x / DNAV:x, and . . .
    • UPAV:x = (E, period's Closes UP) / period
    • DNAV:x = (z: period's Closes DOWN) / period
    • A Close UP (or DOWN) = CLOSE - CLOSE previous

    If the difference is positive, it is a Close UP. If the difference is negative, the sign is changed and it is a Close DOWN.

 

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