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Stochasticoscillator

USDCAD | LT Short D1 | Oil to power CAD StrengthPair: FX:USDCAD Timeframe: D1 - Long Term (LT) Direction: Short Technical Confluences for Trade: - Stochastics are in Overbought Conditions on D1, H4 and H1 time-frames - Price action is at the top-end resistance of a parallel channel - Horizontal trendline looks like a supply zone across few periods - Aiming for the 32.8% Fibo Retracement with 23.6% as the TP 1 level Fundamental Confluences for Trade: - A strong oil story from ongoing geopolitical risks is a strong story for CAD's economy to remain their hold on interest rates while US's reflation story has been priced in by markets - Risk is further war escalation from the Israel-Iran tension which continue the rush to safe-havens like USD or JPY. Suggested Trade: Entry @ Area of Interest 1.3750 - 1.3850 SL @ 1.3898 TP 1 @ 1.3640 (TP Half-Position & move SL to Entry level for B/Even once TP1 is achieved) TP 2 @ 1.3567 Risk-to-Reward @ Approx. 2.08 (Depending on Entry Level) May the pips move in our favor! Good luck! :D *This trade suggestion is provided on an advisory basis. Any trade decisions made based on this suggestion is a personal decision and am not responsible for any losses derived from it.
Short
by weekendanalyst
8
AUDUSD | MT Long H4 | Middle of Parallel ChannelPair: FX:AUDUSD Timeframe: H4 - Medium Term (MT) Direction: Long Technical Confluences for Trade: - Stochastics are in Oversold Conditions on D1, H4 and H1 time-frames - Price action is now at the middle of a parallel channel - Price is at 61.8% Fib Extension Level - Aiming for the 50% Fibo Retracement which the horizontal line shows a supply-demand zone. Fundamental Confluences for Trade: - Higher commodity prices is a positive for Australia economy - Further war escalation from the Israel-Iran tension may bring on risk-off moves and affect this trade Suggested Trade: Entry @ Area of Interest 0.6390 - 0.6415 SL @ 0.6351 TP 1 @ 0.6448 (Close Half-Position & move SL to Entry level once TP1 is achieved) TP 2 @ 0.6516 Risk-to-Reward @ Approx. 2.09 (Depending on Entry Level) May the pips move in our favor! Good luck! :D *This trade suggestion is provided on an advisory basis. Any trade decisions made based on this suggestion is a personal decision and am not responsible for any losses derived from it.
Long
by weekendanalyst
BTCUSD | MT Long H4 | Continuing The Run-Up?Pair: HTX:BTCUSDT Timeframe: H4 - Medium Term (MT) Direction: Long Technical Confluences for Trade: - Stochastics are in Oversold Conditions on D1 and H1 time-frames - Price action may face resistances from being at the bottom of a parallel channel, there is a support trendline going through and there is a demand zone area as shown with the horizontal trendline - Price is close to 32.8% Fib retracement Level - Targeting to trade this position between the Supply-Demand zones as shown with the Horizontal Trendlines Fundamental Confluences for Trade: - Market stabilization from geopolitcal risks and US's strong economic data is happening and may bring back risk appetite - Fiscal dominance concern on the USD may see people try to buy BTC as a store of value (IMO, still not a store of value but as long as the market feels so, I'll go with it first) - Further war escalation from the Israel-Iran tension may bring on risk-off moves and see the BTC fall Suggested Trade: Entry @ Area of Interest 61,500 - 63,500 SL @ 59,843 TP 1 @ 62,648 (Close Half-Position & move SL to Entry level once TP1 is achieved) TP 2 @ 68,838 Risk-to-Reward @ Approx. 2.20 (Depending on Entry Level) May the pips move in our favor! Good luck! :D *This trade suggestion is provided on an advisory basis. Any trade decisions made based on this suggestion is a personal decision and am not responsible for any losses derived from it.
BINANCE:BTCUSDLong
by weekendanalyst
XRP | ST Long H1 | Chance to RallyPair: XRPUSDT Timeframe: H1 Direction: Long Technical Confluences for Trade: - Stochastic momentum is neutral - Price action supported by 100MA - Price bounced off 61.8% Fib levels Fundamental Confluences for Trade: - XRP plans to launch US-denominated stablecoin to bridge the gap between Crypto & Fiat will help generate more uses & liquidity for the XRP Ledger blockchain Suggested Trade: Entry @ Area of Interest 0.6030 - 0.6100 SL @ 0.5856 TP 1 @ 0.6225 (Close Half-Position & move SL to Entry level once TP1 is achieved) TP 2 @ 0.6405 Risk-to-Reward @ Approx. 1.72 (Depending on Entry Level) May the pips move in our favor! Good luck! :D *This trade suggestion is provided on an advisory basis. Any trade decisions made based on this suggestion is a personal decision and am not responsible for any losses derived from it.
Long
by weekendanalyst
BTC | MT Short H4|Consolidation Period Pair: BTCUSDT Timeframe: H4 Direction: Short Technical Confluences for Trade: - Stochastic momentum is close to Overbought Conditions - Price action close to few Horizontal and Resistance Trendlines - Aiming for the 1st 23.6% Fibo Retracement Fundamental Confluences for Trade: - There is a large diversion between the positioning of Long-Term & Short-Term Participants in the futures space. A squeeze may happen. Suggested Trade: Entry @ Area of Interest 70,700 - 71,200 SL @ 72,685 TP 1 @ 68,600 (Close Half-Position & move SL to Entry level once TP1 is achieved) TP 2 @ 65,700 Risk-to-Reward @ Approx. 3.19(Depending on Entry Level) May the pips move in our favor! Good luck! :D *This trade suggestion is provided on an advisory basis. Any trade decisions made based on this suggestion is a personal decision and am not responsible for any losses derived from it.
BINANCE:BTCUSDShort
by weekendanalyst
BITCOIN is still BULLISH. Because we are Embedded. I see people trying to short this market! WRONG, WRONG, WRONG. You should be LONG, LONG, LONG. Whilst the slow stochastic's are embedded - which they have been for 10 days now. How do Slow Stokes embed? 3 continuous days with readings above 80 on the K&D line. You now have a indicator that has flipped from overbought to a LOCKED 🔒 in trend. (This also works in Bear moves with reading under 20) We could see 55K easily by Friday a return. move to the upper Bollinger Band. If at any point the stochastic's close under 80... they can regain their embedded status, the very next day ONLY. Also losing the stochastic's doesn't mean to short, but simply take some chips off the table.
CRYPTO:BTCUSDLong
by BallaJi
15
Beating the S&P500 (SPX) Buy&Hold strategy by 16 timesS&P500 (SPX) strategy using Stochastic RSI Min-Max, normalized Volatility and Trailing Stop signals, beats the Buy&Hold strategy by 16 times Embarking on the quest to time the market accurately, the 'Holy Grail' of strategies, led me to create a script to approach this goal. Unlike other strategies that I tested, this one not only surpasses the long-term S&P500 Buy&Hold approach but does so by a remarkable 16.38 times! Initially, I employed an A.I. program based on an LSTM Neural Network using TensorFlow. Despite achieving a 55% next-day prediction accuracy for short/long positions, I sought improvement using a heuristic pine-scripting approach, incorporating stochastic RSI oscillators, moving averages, and volatility signals. With default parameters, this strategy, freely available as "XPloRR S&P500 Stock Market Crash Detection Strategy v2" delivered a staggering 2,663,001% profit since February 1871. In the same period, the Buy&Hold strategy "only" generated 162,599% profit. Picture this: a $1,000 investment in 1871 would now be worth $26,630,014 by February 2024. Check it out for yourself loading this strategy. The script operates as a Stochastic RSI Min-Max script, automatically generating buy and sell alerts on the S&P500 SPX. What sets it apart? The strategy detects "corrections," minimizes losses using Trailing Stop and Moving Average parameters, and strategically re-enters the market after detecting bottoms using tuned Stochastic RSI signals and normalized Volatility thresholds. Tailor its parameters to your preference, use it for strategic exits and entries, or stick to the Buy&Hold strategy and start new buy trades at regular intervals using buy signals only. In the pursuit of minimizing losses, the script has learned the effectiveness of a 9% trailing stop on trades. As you can clearly see on the upper graph (revolving around 100), the average overall green surfaces (profits) of all trades are much bigger than the average red surfaces (losses). This follows Warren Buffets first rule of trading to "Never lose money" and thus minimizing losses. Update: Advanced S&P500 Stochastic RSI Min-Max Buy/Sell Alert Generator I have also created an Alerter script based on the same engine as this script, which auto-generates buy and sell alert signals (via e-mail, in-app push-notifications, pop-ups etc.). The script is currently fine-tuned for the S&P500 SPX tracker, but parameters can be fine-tuned upon request for other trackers or stocks. If you are interested in this alerter-version script or fine-tuning other trackers, please drop me a message or mail xplorr at live dot com. How to use this Strategy? Select the SPX (S&P500) graph and set the value to "Day" values (top) and set "Auto Fit Data To Screen" (bottom-right). Select in the Indicators the "XPloRR S&P500 Stock Market Crash Detection Strategy v2" script and set "Auto Fit Data To Screen" (bottom-right) Look in the strategy tester overview to optimize the values "Percent Profitable" and "Net Profit" (using the strategy settings icon, you can increase/decrease the parameters). How to interpret the graphical information? In the SPX graph, you will see the Buy(Blue) and Sell(Purple) labels created by the strategy. The green/red graph below shows the accumulated profit/loss in % of to the initial buy value of the trade (it revolves around 100%, 110 means 10% profit, 95 means 5% loss) The small purple blocks indicate out-of-trade periods The green graph below the zero line is the stochastic RSI buy signal. You can set a threshold (green horizontal line). The vertical green lines show minima below that threshold and indicate possible buy signals. The blue graph above the zero line is the normalized volatility signal. You can set a threshold (blue horizontal line) affecting buy signals. The red graph above the zero line is the slower stochastic RSI sell signal. You can set a threshold (red horizontal line). The red areas indicate values above that threshold. However real exits are triggered if close values are crossing below the trailing stop value or optionally when the fast moving average crosses under the slow one. The red areas above the threshold are rather indicative to show that the SPX is expensive and not ideal to enter. Please note that in bullish periods the red line and areas can stay at a permanent high value, so it is not ideal to use as a strict sell signal. However, when it drops below zero and the green vertical lines appear, these are strong buy signals together with a high volatility. These Parameters can be changed Buy Stochastic Lookback Buy Stochastic Smoother Buy Threshold Buy Only After Fall Minimum % Fall Sell Stochastic Lookback Sell Stochastic Smoother Sell Threshold Sell Only With Profit Minimum % Profit Use Sell MA Fast MA Sell Slow MA Sell MA Sell Threshold Use Buy Volatility Volatility Smoother Volatility Threshold Use Trailing Stop Use ATR (iso of a fixed percentage for the trailing stop) ATR Lookback Trailing Stop Factor(or fixed percentage if "use ATR" is false) Trailing Stop Smoother Important : optimizing and using these parameters is no guarantee for future winning trades!
SP:SPXEducation
by XPl0RR
$SPY Bullish Breakout: Cup & Handle Formation on Weekly Chart The AMEX:SPY is exhibiting a compelling technical formation on its weekly chart. A classic cup and handle pattern has emerged, signalling a potential bullish breakout. The cup and handle pattern observed over the past several months on the AMEX:SPY not only signals a bullish continuation following a period of consolidation but also aligns with the current Stochastic Oscillator readings below 70, emphasizing the potential for upward movement without immediate overextension. This formation, marked by a stabilizing rounding bottom and a subsequent minor pullback, reflects a growing bullish momentum, further reinforced by the Stochastic Oscillator's position, which adds confidence in the face of the ongoing market volatility. Based on this analysis, a tactical trade can be structured as follows: Entry Point: Consider entering the trade at the current level, as the price breaks out of the handle. Stop Loss: To manage risk effectively, set a stop loss at the low of the handle. This placement protects against unforeseen reversals in the pattern. Take Profit: The take profit target is set at the high of the cup. This offers an attractive near 2:1 profit-to-loss ratio, aligning with sound risk-reward principles. Risk Management: As always, traders should align this trade with their individual risk tolerance and portfolio strategy. This analysis presents a bullish case for AMEX:SPY , supported by both pattern recognition and oscillator readings. While the setup is promising, traders are reminded to conduct their analysis and consider market dynamics. Disclaimer: This idea is for educational purposes only and should not be taken as financial advice. Trading involves risks, and it is crucial to do your due diligence before making any investment decisions.
AMEX:SPYLong
by Scatman_Jeff
2
Bitcoin Bullish Momentum at Risk as Monthly Stochastic IndicatorBitcoin (BTC) enthusiasts might face some headwinds as a key monthly technical indicator, the stochastic, signals an "overbought downturn" according to Fairlead Strategies. The stochastic indicator recently dipped below 80, which indicates a loss of upward momentum. This indicator typically oscillates between 0 and 100, with readings above 80 signaling overbought conditions and readings below 20 indicating oversold conditions. A downturn from overbought levels suggests a weakening of upward momentum. Strong Resistance Causes Downturn Katie Stockton, the founder and managing partner of Fairlead Strategies, highlighted this development, stating that "at the end of August, Bitcoin confirmed an overbought downturn in its monthly stochastics in a setback." She added that this downturn might prolong the basing process for Bitcoin, especially considering the resistance around $31.9K posed by the monthly cloud model, a level Bitcoin has struggled to breach. Historically, overbought downturns in the stochastic indicator in early 2021 and December 2017 have marked significant price peaks. The monthly MACD histogram, which measures trend strength and changes in trend, is near zero, indicating a neutral long-term bias. Crossings above zero suggest a bullish momentum shift, while drops below zero signal a bearish trend change. However, the MACD has yet to turn positive, implying that a sustainable uptrend has not yet taken hold, according to Stockton. At the time of writing, Bitcoin is trading at $25,700. Stockton identified immediate support at $25,200 and noted that the 50-day simple moving average at $28,200 is a critical resistance level.
INDEX:BTCUSD
by cryptohopper
KAVA Long idea In the ever-evolving realm of cryptocurrency, where fortunes flicker like distant stars, Kava emerges once again, inviting traders on a fresh journey of potential gains and exhilarating market maneuvers. Picture the chart, a line of time etched with the memories of past movements. A channel, like a road leading to possibilities, draws our attention. It’s not just an ordinary channel, but a path that has proven its significance in the dance of prices. This channel, like an old friend, has seen the rise and fall of trends, and now, it beckons us once more. Step back for a moment and ponder the Stochastic indicator, that little oscillating wonder. It's in a state of rejuvenation, its readings bottomed out. It’s as if the market's heartbeat has found its rhythm, preparing for a new pulse. As we study this chart, the Fibonacci 0.786 level glows like a beacon. A level where altcoins seem to whisper secrets, it's a place of interest, often a playground for significant actions. Just as Fibonacci numbers spiral through nature, they spiral through these markets, guiding us. But there's more to the story. Imagine the On-Balance Volume (OBV), a silent observer of market movements. Divergence, like a symphony of intrigue, plays its tune. It’s as if the market is telling us a story, a narrative of potential. It's this divergence that piques our interest, suggesting that hidden possibilities might be unfolding. And then there's volume, the voice of the market, its fluctuations as significant as a conductor's baton. For this swing to work its magic, the crescendo of volume needs to accompany the upward movement. It's the signal that turns a solitary move into a symphony of momentum. This tale, my friends, is not just a glimpse into a crystal ball. It's a calculated dance of data, a thoughtful strategy that beckons you to seize the potential while protecting your capital. As we embark on another swing long trade, armed with knowledge and insight, we brace ourselves for the next chapter. The markets shift, the numbers change, but the essence of trading remains. As Kava extends its invitation, it's time to write the next verse in the saga of potential gains. Gather your wits, adjust your strategies, and let the journey continue. Set your stop-loss, a safeguard against unforeseen tides, below the 0.7815 mark. It's a strategic move to protect your capital, even amidst the allure of profit. So let the path be navigated with both caution and courage, for risks are managed, and the potential for gains remains.
Long
by DepecheGST
What is stochastic oscillator and how to use it?The stochastic oscillator is a popular technical analysis tool used in trading to measure momentum and identify potential overbought or oversold conditions in a security's price. It compares the closing price of a security to its price range over a given period of time. 1| The stochastic oscillator consists of two lines: %K and %D. The %K line represents the current price in relation to the high-low range over a specific period. The %D line is a moving average of the %K line and is often smoothed with additional calculations. 2| Here's a step-by-step guide on how to use the stochastic oscillator: - Determine the time frame: Decide on the time period you want to analyze. The most common periods are 14 days or weeks, but you can adjust it based on your trading strategy. - Calculate the %K line: Determine the closing price of the security for each period and calculate the %K value using the following formula: %K = ((Current Close - Lowest Low) / (Highest High - Lowest Low)) * 100 3| The highest high and lowest low refer to the highest and lowest prices within the chosen period. 4| Smooth the %K line: Apply a moving average (usually a 3-day or 3-week moving average) to the %K line to create the %D line. This smoothing helps filter out short-term fluctuations. 5| Interpret the oscillator: The stochastic oscillator oscillates between 0 and 100. Readings above 80 are considered overbought, indicating that the security may be due for a price decrease. Readings below 20 are considered oversold, suggesting that the security may be due for a price increase. 6| Look for divergences: Divergences occur when the price of the security is moving in the opposite direction of the stochastic oscillator. For example, if the price is making lower lows but the oscillator is making higher lows, it may indicate a potential trend reversal. 7| Use other technical indicators: The stochastic oscillator is often used in conjunction with other technical indicators or chart patterns to confirm signals. It's recommended to use it in combination with other tools for a more comprehensive analysis. Remember, the stochastic oscillator is just one tool among many in technical analysis. It's important to consider other factors such as fundamental analysis, market conditions, and risk management before making trading decisions. Additionally, practice and backtesting can help you gain familiarity with the stochastic oscillator and refine your trading strategy.
AMEX:SPY
by A1TradingHub
How to Analyze the $SPY Daily ChartGreetings fellow traders, Welcome to this installment of our newsletter where we analyze price action on AMEX:SPY on the daily, hourly, and 15 minute timeframes. We will keep this one short and sweet. DAILY TIMEFRAME What is the Trend? The short term trend is bullish: the 9-candle EMA is trading above the 20-candle EMA. The medium term trend is bullish: the 20-candle EMA is trading above the 50-candle EMA. The longer term trend is bullish: the 50-candle EMA is trading above the 200-candle EMA. How Strong is the Current Trend? One of the ways that traders can analyze the strength of a trend is by appeal to the Average Directional Index (ADX). Readings below 20 indicate a weak or non-existent trend. If the ADX is going up, readings between 20 and 40 indicate a developing early trend of low to moderate strength. Readings between 40 and 55 indicate a strong, well-established and robust trend. And finally readings above 55 indicate an extremely strong trend that is likely approaching exhaustion. At the moment, the ADX is 25.04 on the daily chart, indicating a low strength trend that can, with additional momentum, pick up steam. But how likely is this? In order to answer that question, we are going to have to look at several other technical indicators, supply and demand levels, and chart patterns. One of these technical indicators is the relationship between the 9-candle EMA and the 20-candle EMA. Despite the impressive upward move in price action yesterday, the distance between the 9-candle EMA and the 20-candle EMA remained constant from the day before. If the trend was strong, you would expect the distance between the two to be increasing. The fact that it did not is a potential warning sign that the trend is not extremely strong at the moment. What do the Momentum Oscillators Tell Us? Another thing to consider are the two main momentum oscillators: the Relative Strength Index (RSI) and the Stochastic Oscillator. These momentum oscillators can give us clues as to whether or not the current trend is reaching exhaustion, or if it is likely to continue. Let’s first consider RSI. As of yesterday’s close, we have an RSI reading of 65.86 — a reading that is approaching the technical overbought level of 70. For reference, the last time that AMEX:SPY was trading at these levels was in August of 2022. During that incredible summer rally, the RSI pushed all the way up to 73.43 before the trend reached exhaustion and a powerful reversal ensued. Bearing that in mind, you should not necessarily be surprised if AMEX:SPY were to push into that overbought territory this time around as well before reversing. That being said, the Stochastic Oscillator is flashing a reading of 97.52, which is incredibly close to the maximum overbought reading of 100. This is a major indication for technical analysts that we may soon see a mean reversion in price action so that this all-important momentum oscillator can “cool off” for a bit. Indeed, it has been 6 days since AMEX:SPY last made contact with its 9-candle EMA, suggesting that we are potentially due for a basic reversion to the mean in price action. If we were to first push higher, though, there are a few levels on AMEX:SPY to keep in mind. How High can the Market Push? The first is the upper Bollinger Band, which closed yesterday at 430.97. While that value will shift higher today, this upper band is a level to keep in mind as potential resistance should the market catch an end-of-the-week bid. The second level is the high from August 2022: 431.73. Both of these levels are within reach if bulls want them. Finally, if things get really crazy, keep your eyes on 435.34. Are there Signs of Bearish Divergence? Notwithstanding the potential for one final push to enter the overbought territory on RSI, it is very important to note that on Monday of this week we received a technical bearish divergence signal in price action. Even though the market made a higher high than at any point in the previous 30 trading days, we did not get a higher high in: The reading on the Relative Strength Index The reading on the Stochastic Oscillator The reading on MACD When these indicators fail to make higher highs while price is making higher highs, this is an incredibly strong sign of bearish divergence. Should the market push into close, positioning for a mean reversion pullback during power hour should certainly be on watch. What are the Mean Reversion Price Targets? However high price ultimately pushes before reversal, it would be prudent to keep the following potential pullback levels in mind if you are trying to play a mean-reversion trade. The first target would be the 9-candle EMA. While it is currently trading at 424.54, this value will change with each passing day. You can use this, or potentially the 14-candle EMA, as your first “profit-taking target” for a mean reversion trading strategy. Do keep in mind, though, that there is currently some solid demand between 426.14 and 425.82 that we will have to break through in order to gain some selling momentum. The second target, should the first be broken, would be 422.58, a previous resistance level. The third “stretch” target would be around 420.73. Anything below 420 would likely see 418.31. What are the Main Supply and Demand Levels to Add to our Charts? Finally, make sure to track the recent supply and demand levels on the daily timeframe: 429.62 420.72 417.62 415.72 411.92 Stay tuned for the follow-up video where we zoom in on the hourly chart for more specific short-term guidance.
AMEX:SPY
by StockJustice
EURJPY correction inc; RSI/BBAND/STOCH/HAIKEN ASHIInstructions: 1) The Relative Strength Index (RSI) shows that the asset is temporarily overbought/oversold, suggesting a possible trend reversal. 2) Bollinger Bands indicator shows that the asset is currently in an upper/lower resistance/support zone. 3) The Forex Stochastic Oscillator (Stoch) helps identify buy and sell moments based on comparing the current price with the price range over a specific time frame. 4) In addition, I use Heiken Ashi candles, which help to see the trend in a smoother and smoother way. Intervals: D1: . 1) RSI above the 70 level 2) Price is at the Bollinger band 3) Stoch above the 80 level (while, there is still no dominance of the sell line - red) 4) Haiken Ashi still candle color green - we can wait H4: 1) RSI above the level of 70 2) Price is on the Bollinger band 3) Stoch above 80 and the red sell line is dominant 4) Haiken Ashi still candle color green - we can wait Conclusions: Based on the analysis of RSI, Bollinger Bands, Stoch and Heiken Ashi candles, it seems that the EURJPY asset may be at a turning point. On the other hand, it is still worth waiting for stronger confirmation of weakness. Stop Lose: Under the top of the Bollinger band +10/15pips. SL will be set at breakeven after a 10/15pips rise.
Short
by Manticore_Investments
USDCAD moment of correction; RSI/BB/STOCH/HAIKEN_ASHIInstruction: 1)The Relative Strength Index (RSI) shows that the asset is temporarily overbought/oversold, suggesting a possible trend reversal. 2)The Bollinger Bands indicator shows that the asset is currently in an upper/lower resistance/support zone. 3)The Stochastic Oscillator (Stoch) in forex helps identify buying and selling moments based on a comparison of the current price with a price range over a certain period of time. 4)In addition, I use Heiken Ashi candles, which help to see the trend in a smoother and smoother way. Intervals: H4: 1) RSI above lvl 70 2) Price on Bollinger Band 3) Stoch above 80 and Sell Line (red) is on top of Buy line (green) 4) Red Haiken Ashi candle is building H1: 1) RSI close to lvl 70 and indicator is poiting down (sell) 2) Price bounced from Bollinger Band 3) Stoch above 80 and Sell Line (red) is on top of Buy line (green) 4) Red Haiken Ashi candle is building Conclusions: Based on the analysis of RSI, Bollinger Bands, Stoch and Heiken Ashi candles, it seems that the USDCAD asset may be at a turning point. Stop Lose: Above top of Bollinger Band +10/15pips. SL will be set up on break even after 10/15pips profit. Target: 1.355
Short
by Manticore_Investments
Stochastic RSI in detail and how to use it.The Stoch RSI (Stochastic Relative Strength Index) is a technical analysis indicator used to identify overbought or oversold conditions in financial markets. It is a combination of two popular indicators: the Stochastic Oscillator and the Relative Strength Index (RSI). The Stoch RSI applies the Stochastic Oscillator formula to the RSI values, aiming to provide a more sensitive and faster signal for potential trend reversal. The Stoch RSI is calculated as follows: Choose the time period for which you want to calculate the Stoch RSI. The most common period is 14 . Calculate the RSI: (Detailed post on this in the link below) Determine the highest and lowest RSI values: Identify the highest and lowest RSI values over the same time period (e.g., 14 days). Calculate the Stoch RSI: Use the following formula to calculate the Stoch RSI: Stoch RSI = (Current RSI - Lowest RSI) / (Highest RSI - Lowest RSI) The resulting Stoch RSI value will range from 0 to 1 (or 0% to 100%). A value above 0.8 (or 80%) typically indicates an overbought condition, suggesting a potential price correction or reversal, while a value below 0.2 (or 20%) indicates an oversold condition, which may represent a buying opportunity. What does Stoch RSI tell us ? Stoch RSI is a measure of how fast the RSI is changing. As an analogy. Imagine you are driving your car and have foot on the accelerator which will cause increase in the speed of your cat at every moment, now the rate at which your car's speed increases is acceleration. The bigger the more powerful engine your car has the more acceleration you get and the faster you get to the top speed of your car. So, in this analogy speed of your car at any instant is RSI , acceleration is Stoch RSI and top speed of your car is overbought condition of an asset. RSI measures who is relatively more aggressive among buyers and sellers at a given instant. Stoch RSI measures how aggressive the buyers or sellers are at a given instant. So just like in a fight if someone is too aggressive, they are going to spend themselves too quickly and even though they want to fight more they won't be able to until they ease up and relax a bit, this is similar to Stoch RSI of an asset getting to overbought condition and then asset either retraces or takes a pause as buyers are exhausted and need to regain strength by taking profits which turns them into sellers and the asset starts moving in opposite direction. Why is 80 considered overbought? The number 80 is chosen based on empirical evidence, suggesting that when the Stoch RSI reaches these extreme values, there is a higher probability of a price reversal or correction. When the Stoch RSI is above 80, it indicates that the asset's price has risen significantly over a short period and could be overextended. In this situation, the asset may be overvalued, and traders may consider selling or taking profits as the price could reverse or correct. How to use Stoch RSI to enter a trade? How to enter a Long Trade: ======================= Step 1. Always use Stoch RSI along with RSI to make a decision: Step 2. Use it on mid to high term time frame (4h and higher). Step 3. Make sure both RSI and Stoch RSI are in oversold zone. Step 4. Make sure the asset is resting on a key support level and holding it. Step 5. Fearlessly enter the trade. How to enter a Short Trade: ======================= Step 1. Always use Stoch RSI along with RSI to make a decision: Step 2. Use it on mid to high term time frame (4h and higher). Step 3. Make sure both RSI and Stoch RSI are in overbought zone. Step 4. Make sure the asset is rejected from a key resistance level and is not able to breach it. Step 5. Fearlessly enter the trade. What happens if Support or Resistance is broken in Step 3 above: ======================================================= That's where divergences come into play. What is a divergence? =================== Divergence is a technical analysis concept that occurs when the price of an asset and RSI/Stoch RSI indicator move in opposite directions, indicating a potential trend reversal. There are two types of divergences: bullish divergence and bearish divergence. Bullish divergence occurs when the price of an asset makes a new low while the RSI/Stoch RSI indicator makes a higher low. Remember from explanation provided in sections above, this suggests that even though the price is going lower there are more buying activities than selling and the assets are becoming stronger, and a potential trend reversal may be imminent. Bearish divergence, on the other hand, occurs when the price of an asset makes a new high while the RSI/Stoch RSI indicator makes a lower high. I have highlighted bullish divergence in chart with purple line. Shown in Red line is bullish Divergence in Stoch RSI, when RSI is not fully oversold, this can happen when a new support is being formed on the chart due to changes in fundamentals of the underlying asset or some news events. Bullish and Bearish Divergences are even more powerful signals for taking trades, but we must make sure price is holding a support or rejecting from a resistance before taking the trades, otherwise divergences can easily disappear. Why do traders fail to effectively use RSI? The primary reason is lack of experience in trading. Which leads to impatient behavior. Not knowing how to mark key support/resistance levels. No risk management skills. (Taking too much risk) Lack of trust in self when taking trades, (Keep stopping losses too tight which knocks them out of the trades). I have shown several instances where RSI generated long signals and all of them were successful, the only reason a trader would not be able to use RSI effectively is because of the above reasons.
SP:SPXEducation
by zakoraio
Top 10 Technical Indicators for Successful TradingTop 10 technical indicators for successful trading Introduction: Technical indicators are essential tools for traders to analyze market trends, identify potential trading opportunities, and manage risk. These indicators are mathematical calculations based on past price and volume data that can help traders make informed decisions about buying or selling assets. In this article, we'll discuss the top technical indicators that traders can use to enhance their trading strategies. Moving Average: A moving average is a widely used technical indicator that helps traders identify market trends. A moving average is calculated by averaging the price of an asset over a specific period, such as 10 days or 50 days. This indicator smooths out the price data and makes it easier for traders to identify the direction of the trend. When the price is above the moving average, it's considered a bullish trend, and when the price is below the moving average, it's considered a bearish trend. Relative Strength Index (RSI): The Relative Strength Index (RSI) is a momentum oscillator that measures the strength of a price trend. The RSI is calculated by comparing the average gains and losses over a specific period, typically 14 days. The RSI value ranges from 0 to 100, with values above 70 indicating an overbought market, and values below 30 indicating an oversold market. Traders can use the RSI to identify potential trend reversals and overbought or oversold conditions in the market. Bollinger Bands: Bollinger Bands are another widely used technical indicator that helps traders identify potential trend reversals and price volatility. Bollinger Bands consist of three lines: a moving average in the center, and two outer bands that represent the standard deviation of the price data. When the price is within the bands, it's considered normal market volatility. However, when the price reaches the outer bands, it's considered an overbought or oversold condition, and a potential reversal may be imminent. MACD (Moving Average Convergence Divergence): The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that helps traders identify changes in momentum and trend reversals. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A signal line, which is a 9-day EMA of the MACD, is also plotted on the chart. Traders can use the MACD to identify potential buy and sell signals, as well as divergences between the MACD and the price of the asset. Fibonacci Retracements: Fibonacci Retracements are a popular technical indicator that helps traders identify potential support and resistance levels. Fibonacci Retracements are based on the idea that prices tend to retrace a predictable portion of a move, after which they may continue in the original direction. Traders can use Fibonacci retracements to identify potential entry and exit points, as well as stop-loss levels. Stochastic Oscillator: The Stochastic Oscillator is another momentum oscillator that helps traders identify overbought and oversold conditions in the market. The Stochastic Oscillator is calculated by comparing the closing price of an asset to its price range over a specific period. The Stochastic Oscillator value ranges from 0 to 100, with values above 80 indicating an overbought market, and values below 20 indicating an oversold market. Traders can use the Stochastic Oscillator to identify potential trend reversals and overbought or oversold conditions in the market. Average True Range (ATR): Average True Range (ATR) is a technical indicator that measures the volatility of a stock or currency. Developed by J. Welles Wilder Jr., ATR calculates the average range of price movements over a specific period, taking into account gaps in price movements. ATR is typically calculated over a period of 14 days, but traders can adjust this period to fit their specific trading strategy. To calculate ATR, traders first calculate the true range (TR), which is the greatest of the following: Current high minus the current low Absolute value of the current high minus the previous close Absolute value of the current low minus the previous close Once the true range is calculated, traders can calculate the ATR by taking an average of the true range over a specific period. ATR can be used to measure volatility in the market, helping traders to identify potential trading opportunities. When ATR is high, it indicates that there is a lot of volatility in the market, which can present opportunities for traders to profit. Conversely, when ATR is low, it indicates that the market is relatively stable, and traders may want to avoid entering trades at that time. Ichimoku Cloud: The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is a technical indicator that provides a comprehensive view of potential support and resistance levels, trend direction, and momentum. The indicator was developed by Japanese journalist Goichi Hosoda in the late 1930s and has gained popularity among traders in recent years. The Ichimoku Cloud consists of five lines, each providing a different view of the market: Tenkan-Sen: This line represents the average of the highest high and the lowest low over the past nine periods. Kijun-Sen: This line represents the average of the highest high and the lowest low over the past 26 periods. Chikou Span: This line represents the current closing price shifted back 26 periods. Senkou Span A: This line represents the average of the Tenkan-Sen and Kijun-Sen, shifted forward 26 periods. Senkou Span B: This line represents the average of the highest high and the lowest low over the past 52 periods, shifted forward 26 periods. The area between Senkou Span A and Senkou Span B is referred to as the "cloud" and is used to identify potential support and resistance levels. When the price is above the cloud, it indicates a bullish trend, and when the price is below the cloud, it indicates a bearish trend. Traders can also use the Tenkan-Sen and Kijun-Sen lines to identify potential entry and exit points, with a bullish crossover of the Tenkan-Sen above the Kijun-Sen indicating a potential buying opportunity, and a bearish crossover of the Tenkan-Sen below the Kijun-Sen indicating a potential selling opportunity. Conclusion: In conclusion, technical indicators are valuable tools for traders in the financial markets. The Average True Range (ATR) can be used to measure volatility in the market, while the Ichimoku Cloud provides a comprehensive view of potential support and resistance levels, trend direction, and momentum. By using these indicators in combination with other technical analysis tools and market knowledge, traders can make informed trading decisions and improve their chances of success. It's important for traders to experiment with different indicators and find the ones that work best for their trading strategy.
BITSTAMP:BTCUSDEducation
by JS_TechTrading
GBPJPYGBPJPY has been examined in different dimensions: 1- Strong supply and demand levels that I identify with my own indicator and system. 2- The structure of recently formed waves 3- Current market momentum 4- The structure of classical and price patterns In this idea, I identified the direction of the market in different ways and in the second step, I analyzed the potential of continuation or reversal. Usually, paying attention to the trend and strength of the trend can greatly increase the accuracy of the analysis. In general, I tried to describe the continuation of the movement in the simplest possible way in the diagram. ⚠️ Disclaimer: This is a personal opinion and you are responsible for any trading decisions.
Long
by HamidRamezani1992