Here are 10 things to help you in making trading decisions on a technical basis.
Background Information - Check the major averages and market sector. It is important to also look at the technical picture for the average(s) of which it is part--if available, and examine the market sector chart.
Look at all time frames - Daily, weekly, monthly and beyond. Study longer term charts, volume, and indicator patterns before making any decisions based on the daily charts. Look at the daily chart and indicators, if trading on an intraday basis.
Trend Considerations - Examining whether there is a trending or consolidation pattern apparent on the char. Basically, this is always having an eye as to whether the market is trending up or down, versus being in a sideways consolidation or trading range. If in a trading range, is it well-defined, wideranging or relatively narrow, and how long has it gone on? For example, is its duration as long as the prior trend in terms of weeks and months? When a consolidation has gone on as long or longer than a prior price movement of a similar nature, be alert for any trend change.
Overbought/oversold considerations - Long and short-term. As a further technical backdrop, it is recommended to be aware from day to day or week to week, of the relative position of price momentum oscillators like RSI and MACD for daily, weekly, and monthly timeframes. Be aware if the market or stock is approaching an overbought or oversold extreme, whether momentum up or down has been strong, or has slowed significantly. If an extreme reading is at hand or if momentum measured by these indicators has stalled, then it's imporant to follow the price and volume patterns closely for signs of a reversal, while keeping in mind that there are many consolidations along the way in a trend. A sideways trend bears watching in terms of protecting existing profits if the high of the price range already got near price objectives. It may be time to take profits or raise protective stops.
Predictive Patterns - Price and volume. Make a determination of what patterns, if any, are developing, such as rectangles, flags, triangles, double bottoms, double tops, and so on with a possible measurement of an associated minimum upside objective. Volume is something to look at along with price, to determine if the volume pattern is confirming price action or not.
Trendlines and price channels - Construction of any relevant trendlines and price channels is very basic to effective technical analysis and a study of the trend, even if you merely use a straight edge to make more of a mental check of where trendlines are forming or get pierced. While not an everyday occurrence, a return to a previously broken trendline often offers a second opportunity for a trade or investment entry.
Retracement calculations - For the markets and individual items you follow, calculations for any return or rebound of 38%, 50%, or 62% of a prior price swing is essential. A strong move that retraces more than 62% up to two thirds or 66%, often suggests that momentum will carry back to the prior high or low.
Moving Averages - It is suggested that you keep track of some of the basic and key moving averages, such as the 21, 50, and 200 day moving averages. These can help confirm other indicators regarding a current or upcoming trend.
Oscillators - Another frequent check is of the relative position of at least one of the popular oscillator-type indicators like RSI, slow stochastics, or MACD on both daily and weekly or monthly chart basis. This is more than just seeing if they are at an extreme (overbought or oversold), as oscillators are a basic indicator of price momentum. On daily charts, I especially keep track of the RSI indicators with a length calculation of either 13 or 14 and 21 days as well. On weekly charts check the MACD oscillator.
Divergences - One of the great values of the oscillators, and volume indicators as well, is to highlight points when they diverge from price action, such as failing to accompany prices to a new relative high. This type of divergence is much more crucial when the market has been trending for a long period and is, or has been for some time previously, registering an extreme. Such divergences are not by themselves indications to buy or sell, but alert you to a possible reversal. This situation should then cause you to check where key trendlines or moving averages would be violated. Surprise often is the enemy of quick market action, as there is initial disbelief in a reversal. Preparedness is important.