Psychological Line
factor.formula
Psychological Line (PSY) calculation formula:
Default parameters:
in:
- :
The psychological line indicator value on the tth day.
- :
Closing price on day i.
- :
Closing price on day i-1.
- :
Indicator function, if the closing price on the i-th day is greater than the closing price on the i-1th day, it is 1, otherwise it is 0. This function is used to count the number of days with rising closing prices within N consecutive trading days.
- :
The default period length for calculating the psychological line is 12 trading days. Shorter periods are more sensitive to price changes, while longer periods are smoother and can reduce the impact of noise.
- :
It represents the sum from t - N + 1 to t, that is, statistics for the last N trading days.
factor.explanation
The explanation of the psychological line indicator is as follows:
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Value range: The value range of PSY is between 0 and 100.
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Value meaning: The higher the PSY value, the more days the stock price has risen during the statistical period, and the more the market sentiment is biased towards the bulls; the lower the PSY value, the more days the stock price has fallen, and the more the market sentiment is biased towards the bears.
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Overbought and oversold:
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PSY values less than 25 are usually considered to be oversold areas, indicating that the stock price may rebound soon.
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PSY values greater than 75 are usually considered to be overbought areas, indicating that the stock price may be about to pull back.
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PSY values less than 10 are usually considered to be extremely oversold, and the possibility of rebound is high.
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PSY values greater than 90 are usually considered to be extremely overbought, and the possibility of pullback is high.
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Notes on use:
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The PSY indicator is suitable for volatile markets and may lag in trending markets.
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When the market fluctuates widely, the PSY indicator may fluctuate frequently between 25 and 75, generating invalid signals, and it is necessary to combine other indicators for auxiliary judgment.
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The PSY indicator can be used in conjunction with other technical indicators, such as the relative strength index (RSI) and moving average (MA), to improve the accuracy of judgment.
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In different markets and different time periods, the overbought and oversold critical values of the PSY indicator may need to be adjusted according to actual conditions.