In this section, you can find details about technical indicators, supporting tool for technical analysis. It helps us to identify the trend of the stock whether the its in bullish trend or bearish trend. When the stock is at trending zone, moving average can be used. Moving average is nothing but the average value of the stock prices for past n days from current day. It wont help much when the stock is in sideways movement. RSI stands for Relative strength index which help to identify the characteristics of the trend – whether stock is having strength, weakness, overbought or oversold .
RSI > 70 – indicates strength – consider long
RSI < 70 – overbought – consider short
RSI 30 – over sold -consider buying
Hi,
In response to your question
Fibonacci retracement – The Fibonacci sequence is one of the most famous formulas in mathematics. Each number in the sequence is the sum of the two numbers that precede it. So, the sequence goes: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, and so on. Traders believe the Fibonacci series has its application in stock charts as it identified potential retracement levels. Fibonacci retracements are levels (61.8%, 38.2%, and 23.6%) up to which a stock can possibly retrace before it resumes the original directional move.
Golden Mean is 1.618 Logic behind the golden mean is the ratio of two consecutive numbers in the Fibonacci series is the same for all the two consecutive numbers.
Example 1: 21/13=1.618 Example 2: 144/89=1.618
How to use it while trading stocks
First, find the recent significant Swing Highs and Swings Lows. For downtrends, click on the Swing High and drag the cursor to the most recent Swing Low. While for uptrends, do the opposite. Click on the Swing Low and drag the cursor to the most recent Swing High. When you applying the tool, the software shows you the retracement levels automatically.