Thursday, 3 December 2015

An overview of Indicators in Technical Analysis

There are many indicators which are present in the Technical analysis. Some of the common indicators are moving averages, RSI, Bollinger Bands and MACD. Moving averages are the simplest of all the indicators available. Also the moving averages are of two types. One is Simple Moving averages and the other is Exponential moving averages. The moving averages are calculated for a particular period. The average of the most recent price levels is taken. In the exponential moving average the exponential scalar factor is taken along with the price levels. The exponential moving average gives a faster response than the simple moving average. The tactics or the strategy used with the moving average is to draw the moving average of two different periods. One will be a moving average with low period and the other will be a moving average with high period. Various signals are generated when the crossover of two moving averages takes place. Out of the two types of crossover one will represent a buy signal or the start of the uptrend and the other will represent a sell signal or the start of the downtrend.
Besides the moving average the RSI is also an important indicator and is used extensively by the technical analysts. RSI stands for Relative strength index and it takes a value between 0 and 100. The values below 30 are considered to be a oversold case and the value above 70 is considered to be a overbought case. There are potential trend reversal chances at the overbought and oversold levels.

The above discussed indicators are extensively used by the Technical analysts in the advisory firms to generate accurate stock market tips in the form of buy and sell calls with proper stop loss. Makes India Clean is one such reputed advisory firm.

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