Technical About Indicator

(Reference ChartNexus : All Details Collected From Chart Nexus XpertTrader)

Accumulation/Distribution:

            

               Acc/Dis is a momentum indicator measuring the accumulation and distribution in a counter where the accumulation refers to the sustained buying pressure and distribution refers to the sustained selling pressure. It is a volume-based indicator that is used to confirm the strength of the price movement. Acc/Dis may also be used to seek for possible reversal points through the divergence between the Acc/Dis line and the price movement

Average Directional Index

      

           Average Directional Index (ADX) is a popular trend indicator used to measure the strength of a trend. A high reading which is usually taken to be above 25 indicates a strong trend. Readings below 20 indicate a lack of trend. In addition to the ADX line, there are two other lines that are overlaid on the chart which are the +DI and -DI, respectively the Plus Directional and the Minus Directional. Those two lines help to give signals with +DI line crossing up -DI line giving a bullish signal whereas +DI line crossing down -DI line gives a bearish signal

Bollinger Band:

     

          Bollinger Bands refers to the 3 lines namely the MA, the Upper Band and the Lower Band. The main purpose of those 3 lines is to indicate whether an oversold or an overbought condition has happened. An overbought condition occurs when the price goes beyond the Upper Band while an oversold condition occurs when the price goes below the Lower Band. Another use of Bollinger Bands is to identify situations where the band formed by the Upper and Lower Bands gets smaller and smaller. This is called a Bollinger Squeeze and any price breakout of the Bollinger Squeeze may indicate a possible opportunity to catch the ensuing trend. If the price is breaking up the Upper Band of the Bolliger Squeeze, it indicates a bullish rally may happen. Conversely if the price is breaking down the Lower Band, it indicates a bearish rally may happen

Chaikin Money Flow:

            

           Chaikin Money Flow (CMF) gives a measure of the amount of money flow volume over a specified period of time by measuring the close of the price with respect to its high and low together with the volume behavior. Hence if the price has been consistently closing near its highs on high-volume days, we expect CMF to have high values or swinging higher

               CMF oscillates between -1 and +1 with the centerline at the zero level. Hence when CMF moves into the positive region, it indicates buying pressure and conversely if the CMF moves into the negative region, it indicates selling pressure

Commodity Channel Index:

         

              Commodity Channel Index (CCI) is a very useful indicator that tells us how far the price is away from the average price in a certain period. If the CCI value is high, this signifies that the price is far above the average price while a low CCI value signifies that the price is below the average price. Hence, this indicator is valuable in determining if a counter is oversold or overbought. In addition, CCI may detect weaknesses in the trend through divergences with the Price action

Force Index:

       Force index is an indicator developed by Alexander Elder that aims to take into account the direction, extent and volume to determine the shifting power plays between the bulls and the bears. It is calculated by having the current close subtracted by the previous close and then multiplying this number by the volume

GMMA:

       

           GMMA is an indicator that aims to reflect the sentiments of the short-term traders and long-term investors. This is achieved by using 6 short-period Moving Averages and 6 long-period Moving Averages. When the lines in the 2 sets of Moving Averages are parallel and moving in the same direction, it indicates that both the short-term traders and the long-term investors are sharing the same outlook on the counter. On the other hand, if the lines are crossing up and not moving in parallel motion this indicates diverging views between the short-term traders and the long-term investors

MACD

           

        MACD created by Gerald Appel in the late 1970s, is a useful and commonly used indicator  for both its trend and momentum properties. MACD indicator consists of a MACD line, a Signal line and a Histogram. The MACD line is constructed by taking the difference between two exponential Moving Averages while the Signal line is the Moving Average of the MACD line. Hence the Signal line is a slower line compared to the MACD line. The Histogram measures the difference between the MACD line and the Signal line. Generally, a MACD line reading above zero signifies that the counter is trending up while a reading below zero signifies that the counter is trending down. If the MACD line is flat or moving horizontally, it shows that the counter is moving sideways. Another interpretation of the MACD indicator is from the crossover between the MACD line and the Signal line. As the MACD line is faster compared to the Signal line, the MACD line crossing up the Signal gives a bullish signal while the reverse gives a bearish signal. Finally, the Histogram which is tracking the momentum of the counter gives us signals through the change of the Histogram bar heights.

Money Flow Index:

             Money Flow index or the commonly used abbreviation MFI, is a momentum indicator that is based on both price and volume. Hence MFI gives an indication of whether money is flowing in or out of the counter. An upward sloping MFI generally signifies positive money flow while a downward sloping MFI generally signifies negative money flow. An Overbought and Oversold are commonly drawn on the MFI chart which ranges from 0% to 100% to identify the Overbought and Oversold region respectively.

Money Flow Index:

                    Money Flow index or the commonly used abbreviation MFI, is a momentum indicator that is based on both price and volume. Hence MFI gives an indication of whether money is flowing in or out of the counter. An upward sloping MFI generally signifies positive money flow while a downward sloping MFI generally signifies negative money flow. An Overbought and Oversold are commonly drawn on the MFI chart which ranges from 0% to 100% to identify the Overbought and Oversold region respectively.

Momentum:

           Momentum indicator gives an indication of the rate of price change by plotting the difference between the current closing price and the closing price T periods ago. If the Momentum indicator is moving up sharply, this signifies that the price is moving up at a fast rate. Conversely, if the Momentum indicator is moving down sharply, this signifies that the price is moving down at a fast rate.

Moving Average:

            Moving Average is the most common used indicator in Technical Analysis and it is used to indicate the trend of the price movement. As the name indicates, a Moving Average is taking the average of the price in a moving time window. For a simple Moving Average, the weightage of each price point in the moving window is taken equally. However, for some traders who want to give higher weightage to the more recent price points in the window, an exponential Moving Average is used. The number of data points in the window is referred to as Period. Traders typically put a few Moving Averages on the chart with values such as 20, 50, 100 and 200 so as to track both the long-term trend and short-term trend

Price Channels:

  

                Price Channels is an indicator that comprises of two channel lines with the lower channel equalling the given period’s lowest price and with the upper channel equalling the given period’s highest price

Relative Strength Index:

            Relative Strength index or the commonly used abbreviation RSI, is a very popular indicator that measures the speed and change of price movements. This is done by measuring the gains in periods that the prices have closed up versus the losses in periods that the prices have closed down. RSI oscillates between 0 to 100 with overbought and oversold levels typically placed at 70 and 30 respectively. Counters with RSI in the overbought region indicate that the buying might be overextended and a retracement may be imminent. Conversely, RSI in oversold region indicate that the selling may be overextended and a rebound may be imminent. However do take note, in a strong trending period, the RSI might stay in the overbought or oversold region for a long time

Williams %R:

          Williams %R is a momentum indicator developed by Larry Williams. It measures overbought and oversold levels by comparing a counter’s close with respect to its high-low range over a certain period of time. It is used to determine market entry and exit points. The Williams %R produces values from 0 to -100; a reading below -80 usually signifies that the counter is oversold, while a reading over -20 usually signifies that the counter is overbought

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Reversal Indicators

Market Reversal Indicators

           Many fail to act at market tops. When your indications give you a signal that a market top is at hand, sell a portion of your long shares out immediately. Here are a few signs that indicate a change in stock market direction.

• The Law of Effort vs. Result – This key principle is very important for you to take note of when you observe it. When markets are initially breaking out, there will be heavier volume than the preceding days; however, when you start to noticed that volume is staying consistently high or even expanding BUT there is no substantial price acceleration, be alert. This is a tell tale sign of distribution and indicates that the stock markets direction may be about to reverse. What is this telling you? The public is very bullish and that there is a lot of buying going on but there is also a large force that is keeping the market capped out while they are selling to the public. The market will usually come under distribution during an advance rather than a decline. The larger institutions and hedge funds cannot sell when everyone else is; the large number of shares that they must sell will create an unfavorable situation for selling heavy sizes. They need to mask their selling in the face of strength so they can go un-noticed and dump their shares. If you get caught holding the bag on the initial sell-off, stay tuned for a bounce which will allow you to sell your shares out.

• Volume – There is a misnomer that markets need to visibly show heavy volume on the downside in order to be considered a legitimate decline. This is not true. In reality, the first decline off the top will be on lower volume as it is not yet accepted by the public. Most times, you will actually see volume accelerate when the public begins to start accepting the fact that the stock market direction has actually turned lower. The mob mentality will have many sellers panicking at the same time resulting in heavy volume on a flush lower. The price, however, may be considerably off the highs before this happens.

• Divergences between Market Indices – Keep a close eye on this. I tend to look at the NYSE to determine the bigger picture. The problem at times with the DOW is that it only has 30 stocks in it and that may show a different picture than the entire market as a whole. Therefore, keep an eye on the divergences between the different market averages to understand if a rally or a decline in one sector or index is contradictory to general market as a whole. For example, if the DJIA is up 1.5% and the NYSE is only up about .5%, we can clearly see that there is a markup in only a small part of the market. This can indicate that a change in stock market direction is near.

• Interest Rates – This is a key indicator to watch as well. It simple, when the federal funds rate and discount rates are moved higher in succession by the Federal Reserve, a negative posture is taken by the markets. Alternatively, the first rate cut that comes after these increases can be seen to end the bear and bring in the bulls. Also, keep a close eye on M1, M2 money supply changes and the % changes in the Consumer Price Index (CPI)

• Darlings to Dogs – It is typical to see a rotation into the laggards or dogs of the market near market tops. When you see many dogs moving higher, take note and heed the signal that you are receiving, which is that the market is getting ready for an important move DOWN.

• January Effect - As discussed in our article on the January effect in the stock markets, a negative close for the month of January is a very bearish indication and leads to sizeable market debacles in the following months.

• Advance/Decline Line – The A/D line measures the cumulative number of stocks advancing versus declining on the NYSE. This indicator is not very precise; remember that market tops take quite a bit longer to form than market bottoms. Greed is a different animal than fear as fear hits everyone at the same time. The A/D line can start to show divergences far before the market tops out but it is making a clear statement in that the market is rallying on fewer stocks going higher. While it will not indicate the exact top, it will show you in advance that the market is beginning to sputter and to be on guard for a top formation being set up.

• AAII Sentiment – AAII measures the sentiment of the non-professional rated investment community. It represents a ratio of bulls and bears out of the entire population of those polled. This indicator becomes of significance when the value of the AAII bull ratio get below 30% bulls. While the occurrences are rare, it is not something to ignore. When the bull ratio is below 30%, it is an indication that the public is very bearish. This indicator is to be used as a contra-indicator to the current direction of the stock market. Very bearish readings actually are very bullish for the market. As we mentioned above, fear is much easier to gauge than greed and using this principle as a guide, I would say that this indicator is best utilized to indentify bottoms rather than tops.

• Up/Down Volume on the NYSE – I look for days of strong advancing volume to declining volume after a decline to suggest a more meaningful bottom may have been put in. Using a trailing 30 days as a guide, if we see three 90% up volume days without a 90% down day on the NYSE, it is an indication of a more powerful advance in the coming months. While there may be short term conditions that warrant a pullback, the prospectus for the next 12 months is very bullish.

• New Highs & New Lows – Another great tool that measures the percentage of stocks in an index are setting new 52 week highs and lows. It is an oscillator that ranges from 0 to 100. This indicator is more useful in locating market bottoms. A reading below 10% indicates that we should be on watch for a possible major shift in the stock markets direction to the upside.

• VIX Volatility Index – The VIX is derived using the implied volatility in the S&P 500 index calls and puts. It is an expectation of the markets volatility over the next 30 days. The higher the volatility, the more fear there is in the markets. Again, this is a contrarian indicator and when this index reaches above 30, use your other technical indications and start looking for a change in the stock markets direction to the upside.   During this extended recession in the markets, the volatility has gone to record levels and has remained that way for 6 months as the markets continue to crash lower.  Historically 30 is a significant level; however, during a crisis, this number can head much higher.

• Cycles – While nothing is perfect, the 4-year cycle in the stock markets is uncanny with its reliability to provide substantial lows in the stock market. It is pretty simple; you should look for a low in the stock market every four years. Let’s look back in history, 2006, 2002, 1998, 1994, 1990, 1986, 1982 all provided amazing buying opportunities in the stock market. I said its not perfect, and the 1987 crash was one of those occasions. As a result of this steep drop the markets instituted curbs in which shuts down the exchanges during extreme sell offs.  If one had bought the market in 1986, they would have been able to make substantial gains before the 1987 crash occurred. History suggests that we should look for this bottom in the August to October timeframe.
  

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Over View Of Indicators

MARKET INDICATORS

Market Indicators

             

            All of the technical analysis tools discussed up to this point were calculated using a security's price (e.g., high, low, close, volume, etc). There is another group of technical analysis tools designed to help you gauge changes in all securities within a specific market. These indicators are usually referred to as "market indicators," because they gauge an entire market, not just an individual security. Market indicators typically analyze the stock market, although they can be used for other markets (e.g., futures).

While the data fields available for an individual security are limited to its open, high, low, close, volume (see page ), and sparse financial reports, there are numerous data items available for the overall stock market. For example, the number of stocks that made new highs for the day, the number of stocks that increased in price, the volume associated with the stocks that increased in price, etc. Market indicators cannot be calculated for an individual security because the required data is not available.

Market indicators add significant depth to technical analysis, because they contain much more information than price and volume. A typical approach is to use market indicators to determine where the overall market is headed and then use price/volume indicators to determine when to buy or sell an individual security. The analogy being "all boats rise in a rising tide," it is therefore much less risky to own stocks when the stock market is rising.

Categories of market indicators:

                   Market indicators typically fall into three categories: monetary, sentiment, and momentum.

Monetary indicators concentrate on economic data such as interest rates. They help you determine the economic environment in which businesses operate. These external forces directly affect a business' profitability and share price.

Examples of monetary indicators are interest rates, the money supply, consumer and corporate debt, and inflation. Due to the vast quantity of monetary indicators, I only discuss a few of the basic monetary indicators in this book.

Sentiment indicators focus on investor expectations--often before those expectations are discernible in prices. With an individual security, the price is often the only measure of investor sentiment available. However, for a large market such as the New York Stock Exchange, many more sentiment indicators are available. These include the number of odd lot sales (i.e., what are the smallest investors doing?), the put/call ratio (i.e., how many people are buying puts versus calls?), the premium on stock index futures, the ratio of bullish versus bearish investment advisors, etc.

"Contrarian" investors use sentiment indicators to determine what the majority of investors expect prices to do; they then do the opposite. The rational being, if everybody agrees that prices will rise, then there probably aren't enough investors left to push prices much higher. This concept is well proven--almost everyone is bullish at market tops (when they should be selling) and bearish at market bottoms (when they should be buying).

The third category of market indicators, momentum, show what prices are actually doing, but do so by looking deeper than price. Examples of momentum indicators include all of the price/volume indicators applied to the various market indices (e.g., the MACD of the Dow Industrials), the number of stocks that made new highs versus the number of stocks making new lows, the relationship between the number of stocks that advanced in price versus the number that declined, the comparison of the volume associated with increased price with the volume associated with decreased price, etc.

  shows the Prime Rate along with a 50-week moving average. "Buy" arrows were drawn when the Prime Rate crossed below its moving average (interest rates were falling) and "sell" arrows were drawn when the Prime Rate crossed above its moving average (interest rates were rising). This chart illustrates the intense relationship between stock prices and interest rates.

     shows a 10-day moving average of the Put/Call Ratio (a sentiment indicator). I labeled the chart with "buy" arrows each time the moving average rose above 85.0. This is the level where investors were extremely bearish and expected prices to decline. You can see that each time investors became extremely bearish, prices actually rose.

shows a 50-week moving average (a momentum indicator) of the S&P 500. "Buy" arrows were drawn when the S&P rose above its 50-week moving average; "sell" arrows were drawn when the S&P fell below its moving average. You can see how this momentum indicator caught every major market move.

merges the preceding monetary and momentum charts. The chart is labeled "Bullish" when the Prime Rate was below its 50-week moving average (meaning that interest rates were falling) and when the S&P was above its 50-week moving average.

The chart in Figure 38 is a good example of the roulette metaphor. You don't need to know exactly where prices will be in the future--you simply need to improve your odds. At any given time during the period shown in this chart, I couldn't have told you where the market would be six months later. However, by knowing that the odds favor a rise in stock prices when interest rates are falling and when the S&P is above its 50-week moving average, and by limiting long positions (i.e., buying) to periods when both of these indicators are bullish, you could dramatically reduce your risks and increase your chances of making a profit.

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TECHNICAL INDICATORS - Put-Call Ratio

                                                     **Put-Call Ratio**

        A put option is an agreement between two parties to exchange an asset at a pre-determined rate on or before a specific date. The buyer of the put option has the right but no obligation to sell the asset (stock, commodity) at a specified price on or before a fixed date, while the seller has the obligation to buy at the pre-specified price if the buyer wishes to exercise the option.

A call option, on the other hand, gives the buyer of the option the right but no obligation to buy a particular asset from the seller of the call option at a fixed price on or before a particular date.

The put-call ratio is calculated by dividing the number of traded put options by the number of traded call options.

If the put-call ratio is increasing, it means the number of traded put options is increasing, signaling that either investors fear the market will fall or are hedging their portfolios foreseeing a decline.

Sahaj Agrawal, associate vice-president, derivatives, Kotak Securities, says, "A high ratio indicates an over-cautious stance by market participants and hence chances of the market falling are low. Contrary to that, a low ratio indicates over-optimism, and hence caution should be exercised."

Though these indicators are frequently used by traders and fund managers to predict market movements, they may lead to wrong results if used separately, as they are not fool-proof. You can use these together to arrive at a more credible conclusion.

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TECHNICAL INDICATORS - Trading volume

TECHNICAL INDICATORS

**Trading volume**

Trading volume indicates the number of shares or contracts traded in the market. It tells if a particular price trend is supported by market players.

If the price of a share is increasing with higher than normal volume, it indicates investors support the rally and that the stock would continue to move upwards. However, a falling price trend with big volume signals a likely downward trend.

A high trading volume can also indicate a reversal of trend. For example, a drop in the share price with very high trading volume is viewed as a sign that the stock has hit the bottom.

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Economic Indicators: Retail Sales Report

What It Is

The Retail Sales Report is an indicator that follows the dollar value of merchandise sold within the retail trade. Samples are taken from companies that engage in selling products to end-consumers. The report is closely monitored by economists and investors.

Basic Information

The retail sales report includes in its data sample both fixed point-of-sale businesses and non-store retailers. The survey is not limited to large retailers alone. Stores as big as Wal-mart down to “mom and pop” businesses are taken into account in the survey. The report has two main components: total sales figures and ex-autos.

The report is considered a coincident indicator, and is a good measure of the performance of the retail industry and the price level activity in general. The data covered is the previous month’s sales. Consumer spending accounts for about two-thirds of the total GDP, so activity in the retail industry reflects the current conditions of the economy, and as such, Wall street watchers and the Conference Review Board are very interested in it. The retail sales report is also considered a very important pre-inflationary indicator.

How the Report Is Valuable

Information in the Retail Sales Report can cause volatility in the stock market that is above normal. It is seen by investors as a predictor of inflation causing them to consider the possibility of Fed rate cuts or hikes. For example, to try to prevent inflation, the Fed will extend a short-term increase in interest rates in case there is sharp rise in retail sales in the middle of a business cycle. When this happens, investors normally sell bonds causing yields to go up. This will in turn cause problems for stocks since inflation causes decreased future cash flows for companies.

Conversely, a slow activity in the retail market means that consumers are not spending too much and is an indicator for a recession.

Perhaps the most important thing that the report is used for is to measure its reported figure against the consensus number or “street number”. Results that are higher than exepected can provoke investors to unload their stocks and bonds in fear of inflation.

Things to Watch Out For

The released data covers all sectors of the retail industry which gives investors an idea of how their investments (in retail stocks) are performing, regardless of the state of the overall market. Retail companies, because of this, become extremely volatile when the report is released to the public.

What the report does not include is retail services, therefore not all retail activity is truly covered. Retails sales data can vary highly from one month to another making it difficult to predict a trend.

Despite this, retail sales is still a very important indicator of the performance of the economy, and it’s detailed information on the retail industry has a large influence on the market.

Read more at http://www2.thestockmarketwatch.com/learn-stock-market/economic-indicators-retail-sales-report/#3ZaUfGT3WLeb8xsD.99

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Moving Average Of Stock Market

Moving Averages

● What Are Moving Averages? Simply put, a moving average (MA) is the average of a stock price over a set period of time. For example, a 10 day moving average is the average of the last 10 day’s prices. Moving averages can be set to any period of time. If you are looking at a weekly chart instead of a daily chart, the moving average will average each week’s price as opposed to each day’s. Below is a daily chart of Cisco Systems (CSCO) with a 20 day moving plotted over it. Fig 3.1 Click to Enlarge. The 20 day moving average creates a smoothing effect. It allows one to see the general trend without getting distracted by choppiness or extreme moves. Sometimes moving averages are used to replace trend lines. ● How to Use a Single Moving Average Spotting the Trend One use of a single moving average to trade stocks is to spot the trend. The longer you make the moving average, the longer the trend it will tell of. For example, a 5 day MA may be relevant to someone wanting to trade stocks in terms of a few days, but a 200 day MA might be relevant to someone wanting to invest for years. Below is a weekly chart of the Dow Jones Industrial Average with a 50 week MA plotted over it. Fig 3.2 Click to Enlarge. Each point on the 50 week MA is the average of the past 50 weeks of price data. Just taking a quick glance reveals that the Dow Jones, around 2000, switched from an uptrend to a downtrend. This chart, because it’s a weekly chart dealing with a fairly long-term moving average, would be relevant to someone investing in terms of years. (What exactly constitutes a “long” moving average is somewhat arbitrary and is ultimately to product of your own judgment and experience.)            ● Above or Below the Moving Average? Another use of a single moving average is to see if the price is above or below it. If the price is trading above its moving average, it’s considered a bullish sign. If a stock is trading below its moving average, it’s considered a bearish sign. Again, what the length of the moving average is depends on your timeframe for trading. Below is a weekly chart of the NASDAQ Index from ’95 to late ’99, which is the greater part of its famous move up. Fig 3.3 Click to Enlarge. Notice that during that move up, the NASDAQ stayed above its 50 week MA for almost the entire time. Many stocks that experience strong moves up stay above their moving averages for extended periods of time. Any break below it can signal trouble. ● How to Trade Stocks Use Multiple Moving Averages The Crossover A common way of using multiple moving averages is the crossover. In its simplest form, the crossover consists of two moving averages, one being shorter than the other. When the shorter one crosses below the longer one, it’s a bearish sign. When the shorter one crosses above the longer one, it’s a bullish sign. Look at the weekly chart of the NASDAQ Index in figure 3.4 below. Fig 3.4 Click to Enlarge. As you can see in the chart, from ’97 all the way until mid ’00, the NASDAQ’s 20 week moving average (red) stayed above its 50 week moving average (blue). When the 20 day MA crossed below the 50 day MA, a bearish crossover occurred, and the NASDAQ subsequently broke down.

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Indicator Find Oscillation about Stockmarket

Oscillators

● What Are They? An oscillator is a kind of stock market indicator that gives you trading signals. Chart programs generate them for you automatically. All you have to do is read them. Like most things in this guide, we will only go over the most widely-used and accepted ones. We will also not go into the mathematics behind the oscillators, but if you would like to learn, references will be listed. Stochastics   Fig 3.7 Click to Enlarge. Notice that for Stochastics, 80 is the overbought level and 20 is the oversold level. Common usage dictates that if the lines go above 80, then the stock will likely drop. If the lines go below 20, then the stock will likely go up. Another common usage of Stochastics is to buy when the K line (blue) crosses above the D line (red) and sell when the opposite happens. MACD MACD, which stands for “Moving Average Convergeance/Divergeance,” is another stock market indicator generator just like Stochastics, but it looks and acts slightly differently. Take a look below.   Fig 3.8 Click to Enlarge. The most common usage of MACD is to buy when the pink bars cross above the middle “signal” line, and sell when they cross below. Another way to use MACD is to establish your own overbought and oversold levels such as + 0.5 and - 0.5, then buy and sell according to the red and blue lines. RSI RSI, which stands for “Relative Strength Index,” is a stock market indicator developed by Welles Wilder in 1979. It was originally intended for use in commodities, but was found to be useful in stocks as well.   Fig 3.9 Click to Enlarge. For the RSI, overbought and oversold levels are usually set at 70 and 30. When price goes above 70, it’s considered overbought, and when it goes below 30, it’s considered oversold. Another way of using RSI is to look for divergences between the oscillator and the price. For example, if the price makes a new high, but the RSI fails to, it could signal an impending reversal.   Helpful Hints for Using Oscillators:  Overbought and oversold levels work beautifully in a trading range, but they can be disastrous if used wrongly in a trend. During trends, the oscillators can read overbought or oversold for extended periods of time. So never take an oversold reading alone to mean that it’s time to buy.  If a stock or currency is in the middle of a strong downtrend, the oversold indicator could stay that way for years. So before you use an oscillator, first assess whether or not whatever you’re looking at is in a trend. If it’s trending, then it’s best to use overbought/oversold readings to time your entry and exits as you trade WITH the trend. So, for example, if you notice a strong uptrend, then so long as the uptrend is still valid, use oversold levels as entry points, and overbought levels for exit points. No oscillator is perfect. You’ll never find the magic oscillator which gives completely accurate signals all the time. This is a game of probability. You want to use oscillators to increase your chances. The best way to use oscillator signals is to combine them with other technical analysis readings. For example, if you notice a stock is bouncing off a resistance level, and the RSI reads overbought, then you might want to sell. Making decisions using a combination of factors increases your chances of winning. There are over a hundred oscillators that exist. Some are popular some aren’t. You can even create your own oscillators on certain chart programs. Become familiar with the popular ones first, then venture into the unknown if you’d like.

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Indicator Type In Share Market

Indicators Types:

•                        Moving Averages

•                       Volatility Indicators

•                       Momentum Indicator

•                       Trend Indicators

•                       Market Strength Indicators

•                       Special Techniques

Moving Averages:

                  Exponential Moving Average

                 Simple moving average

                 Triangular Moving Average

                 Weighted Moving Average

                 Ingenious MA

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