Few technical indicators to be utilized for broad level stories

  • Chaikin Money Flow
    • Principle: The closer the closing price is to the high, the more accumulation has taken place. On the other hand, the closer the closing price is to the low, the more distribution occurs
    • So, if the price action consistently closes above the bar's midpoint on increasing volume, the CMF would be positive. If the price action closes below the bar's midpoint on increasing volume, the CMF would be negative
    • The trend in price, along with CMF>0 indicates the strength of the trend; Also, check for price-action vs CMF divergence/convergences for confirming the strength of the trends

  • Money Flow Index
    • Principle: It's a momentum indicator that measures the flow of money into and out of the security over time. It is related to RSI but while RSI only takes price into account, it also takes volume into account
    • It is somewhat similar to CMF. In this, the price (avg of high, low, and close) is calculated. Next, money flow is calculated by multiplying this avg price by volume. If the day's price comes greater than the previous day's price, then it's considered a positive money flow, else negative
    • An above 80 value indicates an overbought market while below 20 indicates an oversold. Also, check for price-action vs MFI divergence/convergences for confirming the strength of the trends

  • Fast Stochastic
    • Principle: It shows the location of close price relative to high/low set over a period of time. In a trend, the close price would be closer to the high/low price. Hence, if it starts slipping away from either, it would show a weakening trend. It consists of 2 lines, fast line %K and its moving average %D
    • An above 80 value indicates an overbought market while below 20 indicates an oversold.  Also, look for crossovers of lines. Also, check for price-action vs stochastic divergence/convergences for confirming the strength of the trends

  • Bollinger Bands
    • Principle: It illustrates the simple moving average of the price with the envelope of 1 S.D. above and below. The prices have a tendency to be near the mean of the band in the short-term, and hence could be utilized
    • Bands tighten during low volatility periods and may lead to sharp movements in either direction. Prices also have a tendency to bounce back towards the mean from the band boundaries. Prices may remain close to the band boundary for a prolonged period during a trend. Hence, it is advisable to use this indicator along with other indicators for confirmation

  • On Balance Volume
    • Principle: It is an indicator of cumulative buying/selling pressure. If the current close is greater than the previous close, then the entire volume is considered as an up volume otherwise a down volume. The indicator adds all up volumes and subtracts down volumes.
    • Check for price action vs OBV divergence/convergence to confirm trends

  • MACD
    • Principle: The MACD is a momentum indicator that comprises a line constructed by subtraction of 26 EMA by 12 EMA. The signal line is constructed from 9 EMA
    • Check for price action vs MACD divergence/convergence to confirm trends. Further, MACD > 0 shows a bullish sign while < 0 suggests a bearish. The crossings between MACD and the signal line is also an indicator for bullish/bearish sentiments

  • RSI
    • Principle: It measures the speed and change of price movements
    • Check for price action vs RSI divergence/convergence to confirm trends. RSI > 70 indicates overbought while < 30 indicates oversold. Also, the RSI zone of 40-60 acts as support/resistance for the bull/bear market

  • Stochastic RSI
    • Principle: It measures the speed and change of price movements
    • Check for price action vs Stoch RSI divergence/convergence to confirm trends. Stoch RSI > 80 indicates overbought while < 20 indicates oversold. Also, the RSI zone of 40-60 acts as support/resistance for the bull/bear market

  • Volume Adjusted Moving Average
    • Principle: It uses RSI as an input to the stochastic formulae. It measures RSI's current value relative to its historical low/high
    • A volume increment of 55 could be used to determine the trend. Also, use 13 volume increments to avoid short-term whipsaws
 

References:

https://www.fidelity.com/learning-center/trading-investing/technical-analysis/technical-indicator-guide/

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