ADX trend and strength recognition.
50 day MA and 200 Day MA
Bollinger
MACD Default
StockRSI 14
StockRSI 28
StockRSI 70
StockRSI 140
Chaikin Money Flow
MACD histogram
RSI
Full stochastic 15,5,5
The StochRSI has three (3) additional settings, which are a sub-study of the Momentum group.
"StochRSI" is an indicator of the indicator "RSI". When prices are trending, RSI average reads are hard to figure when they are moving a little above or below the 50 line. Extremes are the signals to be looked for where the average is above RSI 70 or below 30 and this usually signals the start of a reversal; up or down. During times when extremes are not present, The StockRSI can be used to tell whether RSI is oversold or overbought (dip picking or top picking), while RSI is trending in the mid range of an uptrend. One problem has always been continuation of a top or bottom has caused many to close a position when the trend had not finished and, this is why we use the sub studies of the StockRSI 70 and 140 to verify the continuation.
StockRSI was not originally designed to be read this way, but the 70 setting StockRSI is an early signal moving to 80 or 20 that often leads the 140 StockRSI setting in the move to 80 or 20 (The reverse is true for a top as well as a bottom).
Strong fundamentals and an understanding of market motivators in a strong or weak market will change your charting to voodoo charting. With practice,and discipline you may be gazing the crystal ball yourself.
We prefer not to short so we reserve our searchs for bullish settings.
What we are looking for is strong stocks in a strong market where the StockRSI 140 moves above the 80 line and holds, indicating a high potential of a continuation uptrend.
The core of this study is the RSI Relative Strength Indicator (default setting) and the MACD Moving Average Conversion Diversion (default setting) used in a daily candle chart...... these are the Left and right hand of the devil.
I like to group studies with three (3 to 4 ) core indicators because we have three major categories. In the volume category there are other volume indicators to chose from, but as the third (4th)core indicator... I like Chaikin Money Flow - CMF default because it pairs with the MACD visually.
Other indicators play a supporting role but it is the RSI default - (Momentum) and MACD default - (Trend) that play a staring role.
This study actually works quite well in most cases even without volatility.
Three (3) Buy signals are generated when the Macd averages cross to the upside while under the MACD trigger line timed with RSI dipping under 30 while the CMF is showing positive divergence from below compared to price (or CMF is moving above 0).
This is a bottom picking strategy and often the buy indication is a leading heads up for a reversal as the price may still be declining. If you are charting a strong fundamentally sound stock or exchange, and have solid speculation to rely on, then this study works even better.
The three variable studies of the StochRSI indicators are momentum, and when they go positive after a positive diversion suggested by the other indicators, StochRSI (140) over 80 is an indication of a sustained up move where a buy the dip strategy may be successful.
If you're into real whippy type trades, this study can provide some pretty exciting action. Try it out on some of the higher volume volatile stocks using 60 minutes instead of daily. Your focus is on the core RSI Relative Strength Indicator (default setting) dropping below 30 and the MACD Moving Average Conversion Diversion (default setting) averages crossing over to the upside
The other indicators MACD & RSI become unreliable in a continuation type trend, and redundant, often responding erratically (hard to read) so the focus shifts to the Sub Study StockRSI indicators to read what the MACD and RSI might be doing as far as a continuation is concerned..
The TSX was used to demonstrate this study at this link...
Left and Right Hand of The Devil
Bottom Picking EVG.TO
Bottom Picking Variation EVG.TO with this variation is to demonstrate one additional indicator that could be added to the above study... this variation indicator is the very bottom indicator in the study.
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