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13 views

Technical

Uploaded by

Spq Waw
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Technical Analysis –

RELATIVE STRENGTH INDEX RSI


The RSI scale is calculated from 1 to 100, with 1 being the maximum of oversold and
100 being the maximum of overbought. In technical analysis, when the RSI reaches 30
it is time to consider buying and when it reaches 70 it is time to consider selling.
An asset is considered to be over bought (everyone is selling) once the RSI
approaches the level of 70. It means that it is being over valued and you should to pull
back and get out of it. If an RSI approaches 30 it means the asset is being oversold
and likely to become undervalued with traders no longer buying it.

A good RSI is between 30 and 70.


If the Relative Strength Index is below 50, it generally means that the stocks losses
are greater than the gains. When the relative strength index is above 50, it generally
means that the gains are greater than the losses.
When the RSI goes above 80 and then reverses and continues to drop under 50, the
indication is a strong sign that the stock is going to fall back down from its recent
overbought status and price jump. If it moves back below 80 is sometimes known as a
soft sell single and if the fall continues down through 50 this is sometimes known as a
strong heart sell signal.

RATE OF CHANGE ROC


The ROC is 14 Days
A Rate of Change indicator will be positive, negative or zero
If the Roc is below zero then the stock has no value.
If the Roc is above zero it means the stock has a lot of strength to go up.
Many traders use a value greater than zero to indicate an increase in upward
momentum and a value less than zero to indicate an increase in selling pressure.
ROC tends to stay above zero during an up-trend and below zero during a down-trend.
In an up-trend, go long if the ROC turns upwards when below zero.
In a down-trend, go short if the ROC turns downward when above zero.
Go long when the ROC crosses to below the oversold level and then rises back above
it. Go long on bullish divergences – where the first trough is below the oversold level.
Go short when the ROC crosses to above the overbought level and then falls back
below it. Go short on a bearish divergence – with the first peak above the overbought
level.
A crossing up to zero may be used as a signal to buy or crossing down to zero as a
signal to sell. How high (or low when negative) the indicators get shows how strong
the trend is.
This means that when the indicator peaks and begins to descend, it can be considered
a sell signal. The opposite conditions can be interpreted when the indicator bottoms
out and begins to rise.
Some analysts also use the zero level as the basic of a buy or sell decision - buying
when the stock moves from below the zero line to above and, selling when the stock
moves from above to the below the zero mark. However, other market technicians
may consider this to be a slight over simplification of Roc interpretation.

MONEY FLOW INDEX MFI

If the MFI is below 20 it’s oversold and has no value.


If MFI is above 80 it is overbought.
A good stock is between 20 and 80.
MFI is similar to RSI (relative strength index), but MFI also measures trading volume.
A bullish failure swing occurs when MFI becomes oversold below 20, surges above 20,
holds above 20 on a pullback and then breaks above its prior reaction high. A bullish
divergence forms when prices move to a lower low, but the indicator forms a higher
low to show improving money flow or momentum.

A bearish failure swing occurs when MFI becomes overbought above 80, plunges
below 80, fails to exceed 80 on a bounce and then breaks below the prior reaction low.
A bearish divergence forms when the stock forges a higher high and indicator forms a
lower high.

ADX: THE TREND STRENGTH INDICATOR

ADX will range between 0 and 100. Many traders will use ADX readings above 25
suggesting that the trend's strength is strong enough for trend trading strategies.
Conversely, when ADX is below 25, many will avoid trend trading strategies. ADX
value 0 to 25 is absent or a weak trend.
ADX value 25 to 50 is a strong trend. ADX value 50 to 75 is a very strong trend.
ADX value 75 to 100 is an extremely strong trend. If ADX is between 0 and 25 then the
stock is in a trading range. It is likely just chopping around and going sideways. It is
best to not trade them.

Once ADX gets above 25 then you will begin to see the beginning of a trend. When
the ADX is right around this number big moves (up or down) tend to happen.

When the ADX indicator gets above 30 then you are starting to see a strong trend!
These are the stocks that you want to trade!
Generally, ADX reading below 20 indicates trend weaknesses and a reading above 40
indicates trend strength.
You won't see very many stocks with the ADX above 50. Once it gets that high, you
start to see trends coming to an end and trading ranges developing again. An
extremely strong trend is indicated by reading above 50.
The ADX indicator does not give buy or sell signals. It does, however, give you some
perspective on where the stock is in the trend. Low readings have a trading range or
are the beginning of a trend. Extremely high readings tell you that the trend will likely
come to an end.

CCI: COMMODITY CHANNEL INDEX

Developed by Donald Lambert, this technical indicator assesses price trend direction
and strength, allowing traders to determine if they want to enter or exit a trade, refrain
from taking a trade, or add to an existing position. In this way, the indicator can be
used to provide trade signals when it acts in a certain way.

The Commodity Channel Index (CCI) is a technical indicator that measures the
difference between the current price and the historical average price.

When the CCI is above zero, it indicates the price is above the historic average.
Conversely, when the CCI is below zero, the price is below the historic average. When
the CCI moves from negative or near-zero territory to above 100, that may indicate the
price is starting a new uptrend.

When the indicator goes from positive or near-zero readings to below -100, then a
downtrend may be starting. This is a signal to get out of longs or to start watching your
stock.

When the CCI moves from negative or near-zero territory to above 100, that may
indicate the price is starting a new uptrend. Once this occurs, traders can watch for
a pullback in price followed by a rally in both price and the CCI to signal a buying
opportunity.
The same concept applies to an emerging downtrend. When the indicator goes from
positive or near-zero readings to below -100, then a downtrend may be starting.
This is a signal to get out of longs or to start watching for shorting opportunities.

The way traders use the CCI to spot overbought and oversold price levels is based on
simple logic. When the indicator is above +100, the price is above its average. When
the CCI is below -100, its price is below the historical average.
Alternatively, zones over the +100 and below the -100 marks indicate overbought and
oversold price levels. In the former case, when the price moves above +100 and gets
back below it, traders take short positions. In contrast, in the latter situation, when the
indicator dips below -100 and then gets back above it, traders go long in anticipation of
the bullish trend.
Make sure to avoid trading on the first moment when the CCI moves above +100 or
dips below -100. The reason is that during strong trends, the overbought and oversold
conditions might persist for an extended period that could last for up to several weeks.

If the line shoots above the +100 mark, consider it an indication of a strong uptrend.
And vice-versa, if it nose-dives below the -100, take it as a signal for a strong
downward movement.

A basic CCI strategy is used to track the CCI for movement above +100, which
generates buy signals, and movements below -100, which generates sell or short trade
signals. Investors may only want to take the buy signals, exit when the sell signals
occur, and then re-invest when the buy signal occurs again

MACD MOVING AVERAGE CONVERGENCE/DIVERGENCE

MACD crossing above zero is considered bullish, while crossing below zero is
bearish. Secondly, when MACD turns up from below zero it is considered bullish.
When it turns down from above zero it is...

When the MACD line crosses ABOVE the zero line, this signals an UPTREND.

When the MACD line crosses BELOW the zero line, this signals a DOWNTREND.

In addition, the MACD signals buy or sell orders which are given when the two MACD
lines cross over as outlined below:

When the MACD line crosses ABOVE the signal line, traders use this as
a BUY indication.
When the MACD line crosses BELOW the signal line, traders use this as
a SELL indication.

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