With simple averages the calculation is, well, simple. The simplicity of the calculation can sometimes cause a bit of a flaw to the SMA. The flaw is due to spikes in the price of a security. For example, if you were to calculate the 4 day SMA of stock XYZ...
Let us first summarize the exponential moving average. When choosing a moving average that can react quickly to price changes and trends, then the exponential moving average is the one to choose. Act fast in finding a trend and you act fast in making money....
The technical indicator called Stochastics is used to determine patterns of uptrends and downtrends in a stock’s trading pattern. The oscillation of the Stochastics shows you when a stock is nearing or within an oversold area or nearing or within an overbought area. Stochastics come...
The RSI or Relative Strength Index is a technical indicator used to find when a stock has been oversold or overbought. The RSI is usually plotted below the chart and its number always ranges from 0 to 100. As you can see from the chart...
The Symmetrical Triangle chart pattern is formed when a stock’s highs and lows converge together to form a triangle shape. Therefore, the stock is having less and less price fluctuation. This is a stand off with the buyers and sellers. The Symmetrical Triangle pattern is...
Also called an Inverse Head and Shoulders Pattern. This is a mirrored version on the standard Head and Shoulders pattern, the Reverse Head and Shoulders pattern is formed with an initial valley (first shoulder), followed by a lower valley (the head) and finally a higher...
The Head and Shoulders pattern is classified as a reversal formation. The Head and Shoulder pattern can be seen in a chart when it has formed a peak (first shoulder), followed by a higher peak (the head) and a final lower peak (second shoulder). After identifying the head...
The Double Bottom Pattern is formed when a stock’s price falls to a support level once, bounces off and then falls right back down to the same support level. Therefore, usually within a short time span, a stock hit two lows of nearly the same price. The Double...
The Double Top Pattern is formed when a stock’s price climbs to a resistance level once, bounces off and then climbs right back the same resistance level. Therefore, usually within a short time span, a stock hit two highs of nearly the same price. The...
Reverse all that we wrote about the Ascending Triangle Pattern and you have the Descending Triangle Pattern. This means, that the Descending Triangle Pattern is formed when the stock is showing strong support at a given low, but it is having lower and lower highs. The struggle between sellers and...