-
Technical indicators
back up share price charts but do not replace them.
If an indicator contradicts the price charts, it
is a warning.
-
Moving averages
show changes in the average price over a given period.
They lag price action but can be used to assess
its future direction.
-
When the share
price crosses from behind to above the moving average,
it could be leading the trend up and is a buy signal.
If it falls from above to below, it is a sell signal.
-
The MACD is a trend-following
indicator that keeps you perma-nently in the market
- with either a long or a short position.
-
The envelope is
a moving average with an upper band, which is an
overbought line, and a lower band, which denotes
oversold.
-
SARs are a stop
loss solution for technicians. The Parabolic indicator
is an example, and it has a stop loss that accelerates
once the share price has reached a new height but
stops out the trader on the slightest subsequent
faltering.
-
The Accumulation/Distribution
line is a volume indicator that enables you to monitor
the trend.
-
A momentum indicator
measures the rate of change and the direction of
the share price. It is for trading in ranging markets.
RSI and Stochastics are examples.
