Technical Indicators are man made indicators but not a decision maker.
Confirm the TA using the charts that we studied so far. TA is widely followed but this must precede a good understanding of Demand & Supply.
Moving Average shows a smoothed out curve of the trend usually seen over a 21 days period, indicating a month’s trade.
Good to use during a trending phase and may not work during side ways movement but it is difficult to distinguish the sideways movement from a trend.
MA works like a magnet; the concept of equilibrium shares the concept of magnet. As long as the trend is above the MA line, it is +ve and as long it is below the MA line, it is -ve.
RSI Works exceptionally well when the trend moves sideways, a non-trending phase.
Find the 30 & 70 marks point
70 indicates strength but when it crosses 70, it reflects a over bought situation; hence sell at 70 mark.
30 indicates weakness but when it cross 30 and goes below, sell at 30 and buy if it crosses 30 above showing a positive trend.
Hi sir,
Try to understand the Fibonacci Retracement Technical Indicator from the following answers.
1. What is the logic behind golden Mean – Fibonacci Series?:
Fibonacci series is the sequence of numbers in which each number is the sum of the previous two numbers in the sequence.
Fibonacci Series is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,………….
Golden Mean is 1.618 Logic behind golden mean is the ratio of two consecutive numbers in fibonacci series is same for all the two consecutive numbers. Example 1: 21/13=1.618 Example 2: 144/89=1.618
2. How do we use Fibonacci retracement to identify support and resistance zone?:
Fibonacci Retracements are ratios used to identify potential reversal levels. These ratios are found in the Fibonacci sequence.
The most popular Fibonacci Retracements ratios are
1. 61.8% – dividing one number in the series by the number that follows it.
For example: 8/13 = 0.6153
2. 38.2% – ratio is found by dividing one number in the series by the number that is found two places to the right.
3. 23.6% ratio is found by dividing one number in the series by the number that is three places to the right.
To identify support and resistance zones:
For bullish trend Draw Horizontal lines with the bottom & top & considered to be 0% & 100% respectively. if the price goes above 23.6% then there is support the resistance zones can be 38.2% & 61.8% likewise resistance zone is considered.