Technical Indicators

What are Fibonacci numbers? Fibonacci series are numbers starting with 1 and adding the prior number to get the forward number. Therefore, 1 + 1 = 2, 2 + 1= 3, 3+2 = 5, 5+3 = 8, 8+5 = 13, 13+8 = 21 and so forth. These generate the Fib number series 1,2,3,5,8,13, 21....

The parabolic stop and reverse (PSAR) indicator was developed by J. Welles Wilder, Jr. as a tool to find price reversals which can be utilized as stop-loss levels as well as trade triggers. The notable difference about the PSAR indicator is the utilization of time...

The stochastic oscillator is a momentum indicator that can be used the time entry and exits based on the overbought or oversold condition of the underlying financial instrument. Originally developed by Dr. George Lane in the 1950s, the concept was to compare the...

While originally developed by floor traders to indicate static support and resistance price levels based on the prior day’s trading range, pivot points are also regularly used with intra-day trading of stocks. Using the prior day’s open, high, low and close as the...

The money flow index is an oscillator that measures the momentum of the inflows and outflows of money for a stock over a specified period of time. It is a technical analysis charting tool found on most trading platforms. How to Use the Money Flow Index Like any...

A moving average is the average price for a set time period of trade transactions. As each time period ends, the average price of the prior closing trades are calculated to derive the overall average price for the specified number of periods, which is then plotted on...

The Relative Strength Index (RSI) is a momentum oscillator used to gauge the current overbought or oversold condition of a financial instrument on a scale of 0 to 100. Prices are considered oversold when the RSI falls under 30 and overbought when RSI rises above the...

The Moving Average Convergence Divergence (MACD) is a momentum and trend indicator that turns two moving averages into oscillators. It is composed of two exponential moving averages (EMA) and a histogram. There are three components to that are calculated. MACD Line =...

The Volume Weighted Average Price (VWAP) is used to reveal the true average price that a stock was traded at during any given point in the day. The formula is simply a matter of dividing total dollar volume by total share volume. VWAP = (Number of Shares Bought x...

What are Bollinger Bands? John Bollinger developed Bollinger bands in the 1980s. This tool serves two purposes, to measure the nominal trading price range of a stock and to signal when a price expansion or contraction period/phase is forming. Bollinger bands are...