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Three Basic Technical Indicators Before You Buy or Sell A Stock
1. Moving Average Crossovers
Chart analysts like to employ this tool to identify the trend reversal signal. This is how it
works: There are two lines, a fast line with shorter-day moving average (say, 10), and a
slow line with longer-day moving average (say, 20). When the fast line crosses over and
above the slow line, it indicates a buy signal; conversely, when the fast line is below the
slow line, it indicates a sell sign.
Illustration:
10-day & 20-day
This combination of moving averages is good for analyzing fast moving stocks because
it is more sensitive to price change. But, there is one major disadvantage – it generates
quite a number of whipsaws or false signals.
Buy Signal
A buy signal is triggered when the 10-day moving average crosses over and above the
20-day moving average.
Sell Signal
A sell signal is triggered when the 10-day moving average crosses below the 20-day
moving average.
To know more about technical analysis, please refer to www.stockcharts.com
"That's the American way. If little kids don't aspire to make money like I did, what the hell good is this country?" Lee Iacocca |
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| Tip #4 - About Technical Analysis |
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