Moving Averages: A stock’s short-term trend is bullish if share price stays above the 10-day moving average, and
bearish if it stays below. The medium-term trend is positive if share price stays above the 30-day, and negative if it
remains below this average.
14-day RSI: A reading below 30 is considered oversold, above 70 is overbought. A rise above 50 with a corresponding
share price surge above the 30-day SMA should be taken as a bullish move with good short-term upside potential. A
fall below 50 and a simultaneous dip below the 30-day SMA is bearish and imply further near-term downside risk.
Bollinger Bands: Variable width bands that narrow during less volatile periods and widen during more volatile periods.
As a general rule, in a bearish trend, traders should buy when share price touches the lower band and exit when price
touches the middle band. The reverse is true in a bullish trend, ie. buy when price touches the middle band and sell
when price touches the upper band. Momentum traders will buy on price breaks above the upper band, and sell when
price breaks below the lower band. Alternatively, a sharp move that originates at one band tends to go all the way to
the other band, a useful observation when projecting price targets.
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