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
Rate of Change (ROC) & Know-Sure-Thing (KST)
by PRASHANT SHAH -
Below is a hypothetical case to explain a concept. A country has 50 infected people from a disease which is getting widespread. From above table, it is apparent that that the numbers are increasing every day. Now see the same information in below table: Absolute numbers are fine to assess the broad trend. While the ... Read more
Chande Momentum Oscillator (CMO)
by PRASHANT SHAH -
Understanding of indicator with ‘averaging’ and not with ‘averaging’! We discussed the RSI indicator in my previous thread. You might have observed that RSI considers average gains and losses over last 14-days. It is a recommended parameter and widely followed. Wilder’s averaging method is used for RSI which gives comparatively less weight to recent ... Read more
Elder Impulse System
by PRASHANT SHAH -
The Elder Impulse system was designed by Dr Alexander Elder and explained in his book ‘Come into My Trading Room’.It is developed using two indicators: Exponential Moving Average (EMA) and Moving Average Convergence Divergence (MACD – Histogram).Idea of the impulse system is to identify the stocks in strong trends and momentum. Moving average is applied ... Read more
