The technical indicators are the most essential tools that need to be
implemented in order to generate intradaytips. Basically, a technical indicator is sequence of data points that are
obtained by implementing certain formulae to the previous price data of any
stock or security. In this definition, the price data implies any grouping of
open, high, low or close over certain time period. Some of the indicators just
use price of the stocks, while some use volume of the stocks over a period and
few use both price and volume simultaneously. Price data of the stocks are the
input of the formula used and the output produced by those formulae are data
points. These data points help analysts to understand the market trend and the
future expectation of the price of stock.
Technical analysts use indicators to gauge the market trend and price of
the stocks and thus generate free
intraday tips. There are number of technical indicators implemented to
serve the different purposes in the field of trading. However, there are some
technical analysts and even experienced traders implement two or more technical
indicators at the same time. The reason for doing this is to generate the
exclusive and best signals of buying and selling of stocks.
The most common combination of the indicators used together to generate
the accurate tips and predict the market trend is RSI and MACD. Where, RSI is
abbreviation used for relative strength index and MACD stands for Moving
Average Convergence/ Divergence. Both the indicators are fundamental
oscillating indicators.
In this article, the working of both the indicator simultaneously is
explained. For some readers, execution of RSI and MACD indicator at the same
time may sound strange. But the technical analysts implement this bizarre
combination of technical indicators in order to generate intraday tips.
The formula used in RSI to evaluate is
RSI = [100-(100/ 1+ (U/D))].
In this formula above, U stands for average upward change in price of
stocks and D stands for average downward change in price of the stocks.
The values generated by the implementation of the formula lies between the
ranges of 0 to 100. The standard time period set is usually 14 days. However,
traders change the standard time period according to their approach of trading.
For example, if trader is a day trader, then he will change the period to
shorter term while, if the trader is willing to trade for long term trading, he
will change the period to 21- 50 days. The RSI values plotted above 70
represents a position of overbought situation whereas, the values plotted below
30 shows the oversold position. Some of the traders assumes the peak RSI as buy
and sell signals. As soon as they track the values going high or low, they make
mentality of buying or selling. On the other hand, the traders or technical
analysts wait for the values to cross 70 or 30 level to buy or sell the stocks.
This indicator demonstrates the internal strength of a stock. In the
illustration above, the green arrows indicates the RSI moving towards 30, which
is signaling to buy stock. The red arrows in the illustration show the selling
signal as it is moving towards 70. Head and shoulders pattern is also formed indicating
strict sell signals.
This indicator shows the difference between the two moving average of
different lengths i.e., fast and slow moving average. Technical analysts
believe that this indicator is best used in wide swing trading. While traders
implement moving average, one line crosses above the other. As shown in
illustration, the red line crosses over the black line, this is a buy signal.
The traders wish to have accurate freeintraday tips; hence they get in touch with the veteran technical analysts.
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