I'm pretty new to trading and I have a decent ability to read a chart, indicators, etc. I've noticed that when a stock's RSI hits the 20-30 range, there is a pretty good chance that a bounce will occur shortly thereafter. Obviously, this doesn't happen everytime. From y'alls experience, what other indicators work best when used in conjunction with RSI to confirm a bullish reversal. Thanks in advance.
Posted by Harry Bonet on :
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Posted by Who? on :
My two favorite indicators are Stochastics (5,3,3) and Williams %R (10) in combination. I think Stochastic %K crossing %D gives good signals of when to buy and sell.Williams %R also gives early indications of oversold/ overbought conditions. There are many other indicators, but I like to keep it simple.
Posted by Machiavelli on :
quote:Originally posted by alansmithee: I'm pretty new to trading and I have a decent ability to read a chart, indicators, etc. I've noticed that when a stock's RSI hits the 20-30 range, there is a pretty good chance that a bounce will occur shortly thereafter. Obviously, this doesn't happen everytime. From y'alls experience, what other indicators work best when used in conjunction with RSI to confirm a bullish reversal. Thanks in advance.
Candlesticks,OBV,Moving Averages , and volume are all good with RSI...
Posted by johnny14511 on :
williams %
Posted by macdrsirules on :
Williams and sto are oversold/overbought indicators along with RSI. I prefer to use RSI but only if RSI correlates with the price on the chart. Just because RSI goes below 30 does not necessarily make it a buy. If RSI goes above 70 does not necessarily make it a sell. You can actually use just RSI(indicator wise) if it matches to the price well enough. Just wait for candlestick confirmation that the previous trend has ended. I would suggest not buying into stocks that are in a continual downtrend as PPS may drop 50% even when RSI hits 30 and it may stay below 30. The best stocks I have found are generally cyclical in nature or uptrending for RSI. However if stock is in uptrend definitely do not sell right away when RSI hits 70 as PPS may increase 50% and stay above 70 for a while. Use the candlestick confirmation along with RSI.
See how this stock doubled from june to august and RSI was above 70.
If RSI does not get to 30 or 70 adjust your RSI to a shorter time frame. Most use a 14 day RSI. If no signals are generated drop it to 10 day or 7 day. Just be sure it is not generating too many false signals. That is why I like RSI over sto or williams. RSI gives you less signals but is generally more reliable the other two give too many false signals.