ATR (Average True Range)
by PRASHANT SHAH -
Any candle’s range can be defined as the difference between its high and low price. True Range was a concept introduced by J. Welles Wilder. The true range is defined as the maximum of (current high – current low, current low – previous close, current high – previous close) Average True Range refers to the ... Read more
Relative Strength Index (RSI)
by PRASHANT SHAH -
Devised by J. Welles Wilder, RSI (Relative Strength Index) is one the most popular indicators in Technical analysis. Let us try to understand the underlying formula and logic behind this indicator.RSI indicator is calculated on closing price. We can define bullish and bearish price on a closing basis (Line chart) chart as follows: Now that we ... Read more
Decoding 2-period RSI
by PRASHANT SHAH -
2-period RSI is a popular concept introduced by Larry Connors. This method is used by a number of traders in their trading strategies. There are two simple rules in the strategy that Larry Connors explained. For buying: · Price should be above 200-DMA (Long-term trend is up) · 2-period RSI should be below 10 (better ... Read more
RDX Indicator
by PRASHANT SHAH -
Relative Strength Index or RSI and Average Directional Index or ADX are popular indicators invented by J. Welles Wilder.I have explained their nature and calculation in the indicator blog section: RSI and ADX Both indicators use the Wilder averaging method for calculation. 14-period is the default setting for both the indicators.RSI is a momentum indicator. It ... Read more
Pullback & Disparity
by PRASHANT SHAH -
Broadly, there are three types of patterns that we trade: Breakout, reversal and pullback.There are many possibilities and price patterns to find pullback trading opportunities. Check below image. It is a current chart of BHARATFORG on daily 0.25% x 3 box-value. Point A is a strong breakout pattern. Point B is a correction. When stock ... Read more
Ulcer Index – Bears’ & Exit indicator
by PRASHANT SHAH -
Ulcer Index (UI) – Bears’ indicator, Exit indicator. Introduction The Ulcer Index indicator was developed by Peter Marin and Byron McCann. The indicator was first introduced in their 1989 book, The Investor’s Guide to Fidelity Funds. This indicator was designed to analyse Mutual Funds. Ulcer index is known as a volatility indicator but I would not ... Read more
