The current market price is assessed by traders using technical indicators and chart patterns. They create a hypothesis based on past data analysis, calculations, and future predictions. Every trader has an exclusive insight to market movement.
We will discover in this article the most common indicators/patterns that are trusted and used by numerous traders.
HeikinAshi Candlestick pattern
The Heikin Ashi system is ideal for those who are new to trading and have trouble finding the right trend,time and trade.
This candlestick pattern is designed in such a way that it eliminates space, choppiness, and humdrum in the market. By observing this noiseless candlestick pattern, you can detect accurate trends, precise entry points, reversal, and sideways moves in the market.
The uptrend is reflected by continuous green candles building one up the other, with each candle outgrowing the previous one in terms of volume and size. As the trend builds up, one can usually take advantage of it by identifying it in the early stages and take buy trade.
Similarly, a downtrend can be signaled by continuous red candles building one down the other, with each candle outgrowing the previous one in terms of volume and size. One can typically identify the downtrend at an early stage and take a sell trade.
Exponential Moving Average Indicator
In intraday and swing trades, EMA indicators are popular among traders. As the name suggests, this indicator is a curve showing the average stock price along with candles.
Its mechanism works like this: When candles are below the EMA, the price will likely chase its average. Indicators receive a buy signal as a result.
On the contrary, when candles are above EMA then the price would likely move down. This can be an indication of a sell signal.
Traders can choose their own timeframes and change EMA settings. This indicator reacts quickly to any trend change and shows the average of the latest data points.
Relative Strength Index Indicator
A leading indicator for understanding market momentum, RSI measures the strength and momentum of a particular stock or index. It is displayed through an oscillator chart below the candles and ranges between 0-100.
One can define trading parameters and restructure settings according to their own trade setup.
According to RSI’s most tested and executed hypothesis, stocks have reached their low point when RSI is below 30. This zone is called the oversold zone. The trend from here is likely to reverse and one can make buying decisions based on personal analysis or in combination with other indicators.
Similarly, if the RSI has moved about 70, the stock is highly priced and that zone is called the overbought zone. The trend is likely to reverse from here. Once traders find the weakness in the bullish trend and spot reversal confirmation, they take a short-sell trade.
Overall these indicators are easy to use and execute.
Keeping this in mind, AlgoBulls, a user-friendly platform, has come up with numerous AI-driven strategies which are end-to-end automated and have complete robo-touch. It is backed by quant data and endless back-tested research.
This platform gives traders multiple strategies in Equity and options, with every strategy fully resourced with a risk management system, ready order entry-exists, and P/L tracker.
Most of the strategies include Heikin Ashi, EMA, and RSI, helping traders trust the system and easing their path towards the trading revolution!