Wednesday, January 20, 2010

Bollinger Bands with ADX

Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period time.
bollingeradx
Using ADX with Bollinger Bands over 20 days period of time give strong signals:HXVWKX9K87ZV


MACD with Parabolic SAR

Parabolic SAR is more popular for setting stops than for establishing direction or trend.
Parabolic SAR is base on the following rule: to shift the levels of closing prices only in direction of opened position.

If there is a long position opened before, it is possible to increase the level of closing prices, but not to decrease it.
If the short position is opened, it is possible to decrease the level of closing prices.
The indicator can be very effective if a filter of some sort is used like MACD.

MACD with RSI

The MACD proves most effective in wide-swinging trading markets.
Crossovers: the basic MACD trading rule is to sell when the MACD falls below its signal line.
Average Convergence/Divergence rises above its signal line.

It is also popular to buy/sell when the MACD goes above/below zero.
Overbought/oversold conditions: The MACD is also useful as an overbought/oversold indicator.
When the shorter moving average pulls away dramatically from the longer moving average (i.e., the MACD rises), it is likely that the security price is overextending and will soon return to more realistic levels.

Divergence: An indication that an end to the current trend may be near occurs when the MACD diverges from the security. A bullish divergence occurs when the Moving Average Convergence/Divergence indicator is making new highs while prices fail to reach new highs.