What is Technical Analysis
Technical Analysis is a process used to examine and predict the future price of securities by looking at their price movements, Charts, Market Trends and its volume. It allows us to examine market trends and trading data.
Technical Analyst believes that history may always repeat in the stock market. The chart pattern to analyze subsequent market movement to understand market trends.
What is Relative Strength Index (RSI)
It is one of the most popular technical tools which shows overbought and oversold position. Its range from zero to 100. When RSI of any stocks reached at below 20 is called the oversold zone and when RSI of any stock reached above 80 is called an overbought zone.
For short term Trade, it is very useful tools to buy a stock when RSI at a lower level (20) and sell at a higher level (80) and vice versa. It is used to identify the share normal trend.
Moving Average Convergence Divergence (MACD)
It is another popular technical tools which show the two moving averages of the shares or securities price. It is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period exponential moving average (EMA) is called Moving Average Convergence Divergence (MACD) Line.
Nine days exponential moving average (EMA) of the MACD is called the signal line, which gives us a sign to buy or sell the securities. Trader may buy the securities when Moving Average Convergence Divergence (MACD) crosses above its signal line and sell the securities when Moving Average Convergence Divergence (MACD) crosses below its signal line.
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