Technical Indicators – Introduction

Technical Indicators are just indicators which could make an analyst job little easy to identify the trends. However, this trend just indicators and to confirm the indications are justified, we would need to follow the regular analysis of Dow’s/Candle sticks/Gap analysis to identify the supply/demand and strength of the demand.
Moving Average is a smoothed average price movement for a given duration. This is useful for trending zones and may not be useful for non-trending zones or sideways. Generally, it taken for 21 days for identifying the moving average.
Relative Strength Index is called RSI. This index shows 2 levels one at 30 and other at 70 level. Buying zone is when the price goes above 30 level. Selling zone is when the price falls below 70 after a rise.
Golden Mean – Fibonacci Series is a rule of 1.618.
Fibonacci retracement is created by taking two extreme points on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels.