What is average line

The average volume line is a technical indicator that reflects the average market turnover in a certain period of time, that is, the trading trend.

1. Calculation Method

After the transaction volume (value) in a certain period of time is added to the average, a smooth curve is formed in the bar chart of the transaction volume (value), that is, the average line. Generally, the average volume line is set to 10 days as the sampling days, that is, based on the average volume on the 10 days. You can also set the Sampling days on both the 10 and 30 days to draw two average values, among them, the 10-day average line represents the medium-term stock exchange trend, and the 30-day average line represents the long-term stock exchange trend.

2. Principles of Application

In the volume chart of the average volume line, we can see that the average volume line fluctuates between the number of bars in the transaction volume, thus boosting the trend of stock price changes. At the early stage of the market rise, the average volume continuously hits a new high with the stock price, showing the gathering of market sentiment. At the end of the market, although the stock price hit a new high, the average volume line has declined weak, forming a separation of price and volume. At this time, the willingness to follow up on the market High has changed, and the stock price is close to the peak zone.

In the early stages of the decline. The average volume is generally falling along with the stock price, showing that the market sentiment is weak. As the market draws to a close, the stock price keeps falling to a new low, and the average volume line is mostly flattened, or there are signs of an increase. At this time, the stock price has bottomed out and you can consider waiting for the opportunity to buy.

For the two average volume line turnover chart, when the 10-day average volume line is online at 30 days and continues to rise, the market will continue to rise. Otherwise, when the 10-day average line falls below the 30-day average line, it shows that the decline will continue. The trend of the average line, whether turning up or down, indicates that the market may turn around, which is a warning signal. When the average line on the 10-day and the average line on the 30-day cross and the golden or dead cross in the moving average line theory, it is the confirmation of the turning trend of the market. At this time, it should be determined together with other technical indicators, make favorable investment decisions. In the inventory board, the 10-day average line and the 30-day average line show unclear, and the last 10-day average line goes up or down beyond the 30-day average line, it can indicate that the market broke the inventory Board direction, it is a more accurate breakthrough auxiliary signal.

3. Function Analysis

When determining the average line, you must note that the fluctuation of the average line does not provide the buy or sell signals in the so-called program sales, nor does it have the function of moving the average line to help increase or decrease the stock price. The average line only reflects the main trend of market stock exchange and plays an auxiliary role in the future trend of stock price changes.