Tech Indicators

Tech Indicators

1. Terminology

   • Momentum
     • Rate at which price changes

2. RSI

   • Relative Strength Index
   • Lagging indicator of Momentum
     • Over sold < 30
     • Over brough > 70
       • If remains long period buy
         • Otherwise Sale
     • Indicate trend reversal
   • RSI = 100 - 1/(1+RS)
     • RS = Avg. Gain Days/Avg. Loss Days
       • Data point = 14
       • RS is Relative Strength
     • Range : 0 to 100

3. MACD

   • Lagging indicator
     • MACD line above Signal Line means Bullish
       • Otherwise sentiment is Bearish
   • Moving Average Convergence & Divergence
   • MACD line is 12d EMA – 26d EMA
     • Signal Line is 9d EMA
     • EMA is Expontial Moving Average

4. Bollinger Bands

   • 20d SMA line bounded by +/- 2 SD lines
     • SMA (Simple Moving Average)
   • Works in side wise market, fails in trending market