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Tuesday, 19 January 2016

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Trading Strategy Involving RSI and Candle Stick Patterns-Money Classic Research

Different traders have different approaches towards the Stocktrading. Some people follow technical analysis and other follow Candle Stick analysis. There is yet another group where the traders trade on the basis of latest news. In this article we are going to discuss an approach using both Technical analysis and Candle Stick analysis in conjunction with each other. The trading strategy involves the use of RSI and Candle Stick Patterns to determine the buy and sell signals.
RSI is an oscillator indicator. RSI stands for relative strength index and is used to determine the overbought and oversold levels. The buy and sell signals can be placed when the market is an oversold and overbought levels respectively. The value of 30 and 70 are taken as the standard values of overbought and oversold levels.
In case of candle stick patterns the candles are used to represent the price movements in a given time frame. The red candles represent the price fall and the green candles represent the price rise. The shadows of the candles represent the high and low of the price in the given period.
The RSI can be used to see the potential chances of trend reversals. At the overbought and oversold levels the reversals can be anticipated and the buy and sell calls can be placed. The buy and sell signals can be further confirmed by the candlestick patterns. The reversal patterns like doji , hammer etc give the confirmation that the prices are going to return and the buy or the sell signals can be placed.

The strategies discussed above along with many other strategies are used by the analysts in the advisory firms to generate accurate stock market tips. Money Classic Research is one such advisory firm which provides equity tips and accurate intraday trading tips to their clients.  

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