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 The two main type of indicators are oscillating and trending.  Typically, the most common price action is oscillating, but trending is much stronger.  Oscillating price action moves up and  down in a channel, generating a small net change compared to the amplitude of the move itself.  Trending action penetrates support/resistance price levels to produce a large net change.

Oscillating Indicators:
1. Ultimate Oscillator

The lower dashed line is the oversold line, and the upper dashed line is the overbought line.  With technical analysis, you must use multiple types of indicators in order to generate confidence in a trade.  Without confidence you should not be invested.

2. RSI (Relative Strength Index)

As you can tell from this graph, it is critically important to use multiple indicators to generate an overall perspective on future market action.

3. Slow Stochastic (10,3,3)

10,3,3 stochastic
The slow stochastic is comprised of 3 settings.  First is the period, in this case 10, which is the timeframe applied to a single data point.  Next is the fast line setting, in this case 3, which is an average of 3 data points.  The last setting is the slow line setting, in this case 3, which is an average of 3 points of the fast line.  The stochastic produces graphically the relative position of the subject price in a price channel.

Tending Indicators:

1. MACD (Moving Average Convergence Divergence Diagram)

The MACD histogram is the yellow, notice the signal location is AFTER the change in direction of the histogram.  Examine the whole chart, notice this signal is clear but it is not always the case.  When using technical indicators, it is always important to use multiple indicators to paint a picture.

2. ADX (DMI) (Average Directional Indicator, measuring strength and direction)

Positive signal = green positive line above red negative line AND above the brown strength line.
Negative signal = red negative line above the green positive line AND above the brown strength line.

3. Moving Averages

Moving Averages
Red line = 200 day simple moving average SMA
Yellow line = 50 day SMA
White line = 25 day SMA
Notice how moving averages actually appear to influence price action, item 1 on chart.  The point identified as 2 is what is known as a death cross, this is where the 50 SMA crosses below the 200 SMA.  The converse of the death cross is the golden cross.

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