Stock Trading Signals
Essential Technical Analysis Indicators



Ok, to time your exit & entry of a trade, you need these stock trading signals displaying on a stock chart. I use these stock market signals as confirmation of changing trends together with support and resistance & trend lines as mentioned in learn to read charts page to enter & exit a trade. A few indicators on the stock chart are adequate.





Use these technical analysis indicators when price are in an up or downtrend

Moving averages

When two moving averages cross up ( golden cross), it is a buy signal.It is a sell signal when they cross down. You need to set the setting to display them on a chart.

1. I use 50 & 200 MA as a guide for medium to long term trade. Normally, people consider it as a bear market when price is below 200 MA and bull market when it's above 200 MA.

2. Most people use 20 & 50 EMA, especially trading currencies. I use 3 & 13 EMA for trading from 5 minutes to a few days/weeks. It seems to get in & out of the trade a little quicker with these stock trading signals settings. You may need to experiment this to fit your requirement as some work better on certain financial instruments

MACD

I use both histogramm and signal lines. Default setting works most of the time, but I would change it to 5, 35 & 5. It seems to work better. Ideally,when it's trending up, the MACD histogramm should be in the positive part. When it slows down & begin to turn negative, it's sign of trend reversal.

I also look at the signal lines to see if they cross up or down for buy or sell stock trading signals. When the stock market timing signal diverge with price, a trend reversal is imminent.



Use these technical analysis indicators when prices are oscillating or in a horizontal range

Stochastics.

Default setting work quite well most of the time. But you may adjust it to 20,12,9 as some stocks seem to fit better with these settings.

When it's below 20%, it's consider as oversold & overbought when it's above 80%.

Buy stock timing signal is when the two signal lines cross up, especially when it happens at or below the 20%

Sell stock trading signals are when these two signal lines cross down, especially when it happens at or above 80%.

Relative Strength Index ( RSI)

I normally use default setting as 14. A buy signal is when it's above 50. Sell stock trading signals are when it's about to go below 50.


Volume

Can be used for trending and sideway/oscillating moves. Without volume, price won't move, especially on small cap/ penny stocks. It's a matter of supply and demand. When prices are rising, you need the trading volume to go up. When prices are decreasing, volume should also decrease.

When you have volume diverge with price, an imminent price/trend reversal will take place however temporary it may be.

Have a look at these 2 S&P 500 charts. The 1st is a rough gauge at the medium to long term view. See how the 50 day ( red line) moving average acted as a support/resistance line.50 & 200 MA crossed up at July 06 and crossed down at Jan 08.

Will it break down pass the previous support /resistance and into the next support area near July 06 low, where the vertical line is showing?

sp500-long-term-chart

The next chart zooms in a little nearer. See how the 3, 13 EMA works a little better if you sell at the top. Although this is a downtrend, you still can use the oscillating indicators for the small up & down movement within the trend.

Note, volume went up on the lowest bar in late Jan, MACD signal lines crossed up,MACD histogramm turned positive, RSI heading up and Stochastics already crossed up. These stock trading signals tell you to buy, even though it's a downtrend. An ideal trade set up for a few days.


sp500-daily-chart-with-technical-indicators

Prices seem to be in a trading range or going sideway from late Jan to April. So you can't rely on moving averages.

Note, at mid March with the lowest price bar, MACD signal lines crossed up, MACD histrogramm turned positive, Stochastics already crossed up and heading above 20%.My market matrix analysis predicted a turning point near that day. I had no hesitation but placed an up bet on that day and keep moving my stop loss until the next predicted turning point.

When I saw stochastics begin to cross down for the 2nd time,MACD slowing down, RSI heading down, I moved my stop loss to lock in profit to be just below the low of the highest bar in April. I was out of this trade at a very nice little profit.

I use these stock trading signals in conjunction with Dynamic Trader software for my Market Matrix analysis. I will show you these software and analysis on another page.

Although these stock trading signals lag behind the price, the above do work, especially in conjunction with support and resistance. All you need to do is to learn these simple stock trading signals by heart and apply them to your trades.



Ever Wonder What Will Happen To Dow Jones Now That You Know About Moving Averages And Other Stock Trading Signals?

DJIA's 200-Day Moving Average: Will the Dow stay above or below this demarcation line?

June 23, 2010

By Elliott Wave International

Moving averages are one of the most widely followed indicator in technical analysis.

Simply put, when the price of an index or stock stays above a particular price moving average line on a chart, that price level serves as support a level where buyers reside.

If the price falls below a moving average line and can't break through from the underside,this price level is a line of resistance a price level where sellers hover.

That's an easy explanation of moving averages for you.

Learn to integrate Elliott wave analysis with other technical disciplines. Read the FREE Ultimate Technical Analysis eBook to discover some of the favorite technical analysis methods used by the analysts at Elliott Wave International. Learn more and download your free, 50-page technical analysis ebook here.

A commonly watched line is the 200-day moving average.

After the DJIA fell below its 200-day moving average in May, prices remained mainly below the line until June 15, when the market rose 213 points. But, as this chart from Elliott Wave International's June 16 Short Term Update shows, the NYSE volume has remained muted:

DJIA's 200-Day Moving Average: Will the Dow stay above or below this demarcation line?

"There was no follow-through today. More stocks closed down than up on the day on the NYSE, within the S&P 500 and also for the DJ Composite. Today's Big Board volume was similarly slow relative to yesterday. ..." -- Steven Hochberg, Short Term Update, June 16, 2010

With a lack of buying conviction, how long will the stock indexes remain above the 200-day moving average?

For the answer, you need to look at the DJIA's Elliott wave structure. It strongly suggests the market will move in a definite direction in a matter of days or weeks.

Learn to integrate Elliott wave analysis with other technical disciplines. Read the FREE Ultimate Technical Analysis eBook to discover some of the favorite technical analysis methods used by the analysts at Elliott Wave International. Learn more and download your free, 50-page technical analysis ebook here.

This article, DJIA's 200-Day Moving Average,was syndicated by Elliott Wave International. EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


Still Lost Or want to Learn some more ?

This free email stock trading course that I have accidentally come across can enforce your understanding and applying technical analysis to your trading.

It's from Adam Hewison of INO. There is no catch apart from sign up using a real email account.


Click here to learn more about technical analysis Free Trading Course while it's still available.


You can click on play button to watch a small introduction to this email course using technical analysis along with their stock trading signals (trade triangles) to analyze Crude Oil.


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Ramp will also show you, using several different trading indicators, when it is a good time to enter a trade.

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