Moving Average Convergence Divergence (MACD)
• The basic rules for trading the MACD would enter trend positions by referring only to the signal line calculation. Buy when the signal line moves above zero, and sell when the signal line falls below zero.
• Watch for Kiss of life and Kiss of death patterns to catch a big move.
• Price is supreme, confirmation of prices is important to initiate position.
• One should not try to pre-empt the patterns or the crossover will happen.
Relative Strength Index:
• A popular method of analyzing the RSI is to look for a divergences (both positive and negative) to get alert not react.
• Look for stock coming out of Overbought and Oversold regions.
• Act on divergences only on price confirmation (preferably averages) to initiate trade.
• Basic mistake is seen when stock enters overbought zone, people refrain from long side andRead More »from Approach of investor while using technical indicators