Trading Pattern Overview
We Can Loosely Analyze A Stock In This Ways :
“Technical analysis and fundamental analysis are the two main schools of thought when it comes to analyzing the financial markets. As we’ve mentioned, technical analyses looks at the price movement of a security. They use this data to predict future price movements. Fundamental analyses instead, look at economic and financial factors that influence a business.
Let’s dive deeper into the details of how these two analytical processes differ, and how they can be used together!
Day traders are mostly concerned with technical analysis and as such have developed a large skillset for analyzing price movements. These are referred to as “technical indicators”, we will refer to a number of these throughout this blog series. For a full list of technical indicators take a look at this page here:
AI INDICATORS
Useful Indicators :
Simple Moving Average
Exponential Moving Average
Relative Strength Index
Stochastic Oscillator
MACD
Price
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Simple Moving Average
A simple moving average (SMA) is an arithmetic moving average calculated by dividing that sum of recent prices by the number of time periods in the calculation average. For example, one could add the closing price of a security for a number of time periods and then divide this total by that same number of periods. Short-term averages respond quickly to changes in the price of the underlying security, while long-term averages are slower to react.
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A simple moving average (SMA) calculates the average of a selected range of prices, usually closing prices, by the number of periods in that range.
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A simple moving average is a technical indicator that can aid in determining if an asset price will continue or reverse a bull or bear trend.
Exponential Moving Average
An exponential moving average (EMA) is a type of moving average (MA) that places greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average. An exponentially weighted moving average reacts more significantly to recent price changes than a simple moving average (SMA), which applies an equal weight to overall observations in the period.
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The EMA is a moving average that places a greater weight and significance on the most recent data points.
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Like all moving averages, this technical indicator is used to produce, buy, and sell signals based on crossovers and divergences from the historical average.
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Traders often use several different EMA lengths, such as 10-day, 50-day, and 200-day moving averages.
Relative Strength Index
The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100. The indicator was originally developed by J. Welles Wilder Jr., introduced in his seminal 1978 book, “New Concepts in Technical Trading Systems.”
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The relative strength index (RSI) is a popular momentum oscillator developed in 1978.
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The RSI provides technical traders with signals about bullish and bearish price momentum, and it is often plotted beneath the graph of an asset’s price.
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An asset is usually considered overbought when the RSI is above 70% and oversold when it is below 30%.
Stochastic Oscillator
A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result. It is used to generate overbought and oversold trading signals, utilizing a 0–100 bounded range of values.
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A stochastic oscillator is a popular technical indicator for generating overbought and oversold signals.
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It is a popular momentum indicator, first developed in the 1950s.
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Stochastic oscillators tend to vary around a mean price level, since they rely on an asset's price history.