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Market Edge Says Back to Education Institute Technical Indicators For Either A Trading Or Trending Market Once the status of the market is determined, these indicators will get the job done. It is important for the stock trader to recognize which phase the market is in and utilize those technical indicators that perform the best in that environment to time entry and exit points.
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When the market is in a trading range, oscillators and short term moving average crosses will produce the best results. The stochastic oscillator compares where a stock's price closed relative to its trading range over x-time periods. Values range from 0 to Readings over 80 signal overbought bearish conditions, while readings below 20 are regarded as an oversold bullish situation.
Both overbought over 80 and oversold under 20 areas are labeled. This represented a very oversold situation and an excellent time to purchase IBM shares.
During this period the market was in a strong trend coming off the September lows. MACD-LT stands for moving average convergence-divergence-long term.
MACD, developed by Gerald Appel, consists of three exponential moving averages of a stock's closing price. Exponential moving averages assign greater weight to the most recent price data and therefore is more sensitive than simple moving averages. The MACD indictor has a Differential Line and a Signal Line.
The Differential Line is constructed by measuring the difference between two exponential moving averages, a 12 and day time period. The Signal Line is a 9-day exponential moving average of the Differential Line.
Buy signals occur when the Differential line crosses the Signal line from below while the reverse generates a sell signal.
Incredible Charts: Moving Average Systems
As can be seen from the chart, MACD-LT was a very accurate indicator during the run that WMT experienced from 48 - 62 over a five-month period. In addition, Market Edge www. Subscriber Login User ID: Stop "Remember My Account".
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