Thursday, August 13, 2009

Technical Indicators

MACD

Use - 8/20 MACD with a trigger of 9
Use in conjuction with the 3/7 simple moving average

A bearish divergence occurs when the market makes a higher high than the previous high, but the MACD indicator fails to make a corresponding high.

A bullish divergence occurs when the market makes a lower low, but the indicator doesn't make a corresponding low.

CCI

CCI of over +100 indicates a strong bull trend
CCI of under -100 indicates a strong bear trend

Execute long position once CCI reaches 100 and sell the position when it falls back to 85
Execute sell when CCI falls below -100 and liquidate position when it reaches -85

Stochastics

When both lines are...

Below 20 - oversold
If below 20, buy signal is triggered when %k line crosses over the %d lines

Above 80 - overbought
If above 80, sell signal is triggered when %k line crosses below the %d line

Williams AD

Distribution - When the market is making a new high and the AD indicator fails to follow, then a sell signal is generated
Accumulation - When the market is making new lows and the AD fails to follow, then a buy signal is generated


Williams %R

Use 10 day.
When the %R rises from below 20% to greater than 20%, a buy signal is triggered.
When the %R falls from above 80% to below 80%, a sell signal is triggered.


Bollinger Bands

Buy signal created when market goes lower than the lower band, sell indicator when market goes above upper band.
Wider bands indicate high volatility, narrow indicates low volatility

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