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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