Adding an additional indicator, such as the moving average convergence divergence (MACD), to time market entry and exit further improves returns.
Its MACD or Moving Average Convergence Divergence was at a negative 28.749 on Friday (bottom portion of the chart) and has increased to a negative 26.6 on Monday morning.
While the market could continue to rise the indicators that show short-term overbought conditions such as the RSI (Relative Strength Index) and the MACD (Moving Average Convergence Divergence) are both solidly in overbought territory.
Of course, in very strong bull or bear markets, we must rely on technical indicators that can stay with strongly trending markets, as momentum indicators like the Moving Average Convergence Divergence (MACD) indicator or Relative Strength Index (RSI) will top or bottom out well ahead of prices.
Appel looks at moving averages to discern trend, particularly the moving average convergence-divergence.
There are a number of technical tools that can be used to ascertain trends, such as Donchian channels, the Williams %R oscillator and Moving Average Convergence-Divergence, often referred to simply as MACD.
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During this decline, the weekly RSI dropped back below its weighted moving average, which increased the odds that a weekly divergence would form if AAPL made further new highs.
As discussed earlier, the weekly RSI formed a second bearish divergence and just barely moved above its weighted moving average.
Weekly on-balance volume (OBV) did form a negative divergence in August and has dropped below its weighted moving average (WMA).
The weekly OBV formed a negative divergence at the recent highs before dropping below its weighted moving average (WMA).
The OBV has formed a slight negative divergence, line b, and has dropped back below its weighted moving average.
The weekly OBV formed a minor negative divergence at the highs (see circle) before dropping below its weighted moving average in March.
As noted previously, the weekly on-balance volume (OBV) did form a negative divergence at the recent highs (see circle) and is now testing its weighted moving average.
The Dow Jones Transportation average has led prices on the downside since the weekly on-balance-volume (OBV) formed a negative divergence in May.
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