While we briefly covered candlestick charts in the previous lesson, we’ll now dig in a little and discuss them more in detail. First let’s do a quick review .
Back in the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice.
A westerner by the name of Steve Nison “discovered” this secret technique on how to read charts from a fellow Japanese broker and Japanese candlesticks lived happily ever after .
Relative Strength Index (RSI)
Relative Strength Index, or RSI mean A technical indicator used to compare the magnitude of recent gains to recent losses to determine overbought and oversold conditions in the market. . It can be calculated using the this formula:
Rsi=100 100- 1+rs
readings below 20 refer to oversold, while readings over 80 indicate overbought. the RSI ranges from 0 to 100 .
A stochastic is an oscillator that will help us measure the overbought and oversold conditions in the market . The Stochastic is an another indicator to help us to know where a trend will be ending. A technical indicator used to compare a security’s closing price to price range over a given period .
Ma summary Moving averages are one of the most famous tools and also the easisest tool used by many traders We can find many types of moving averages .
the 2 most popular types are: Simple Moving Average and Exponential Moving Average.
• The simple form of moving average (SMA) will be the simple moving average, is formed by computing the average = price of a security over a number of periods
• Exponential moving averages: EMA’s reduce the lag by applying more weight to recent prices relative to older prices.
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