Moving Averages provide an indication of trend. Price ranging above the moving average toward the top bollinger band indicates a rising trend, ranging below towards the bottom bollinger band indicates a falling trend. Shorter term Moving Averages crossing longer term Moving Averages signal a break in the previous trend.
Prices oscillate within trends. If a price oscillation pattern can be identified project the next low and high price points (considering the current trend) and the oscillation period to determine when the next low and high are likely to occur. Review previous support and resistance levels.
Consider overall market trends and strategy.
Within the window of opportunity apply buy/sell trading rules....
- %K on the Slow Stochastic Oscillator moves upwards from below 20% and crosses above %D.
- Money Flow Index (MFI) / Relative Strength Indicator (RSI) increasing from preceeding trend.
- In a flat or rising trend price drops below the bottom Bollinger Band and is followed by a higher low or there are strong previous support levels at least twice the level required for a profitable trade.
- %K on the Slow Stochastic Oscillator moves downwards from above 80% and crosses below %D.
- Price above the top Bollinger Band.
- Money Flow Index (MFI) / Relative Strength Indicator (RSI) decreasing from preceeding trend.
A stop loss position must be set for each Buy. Determine the Stop Loss point by reviewing previous support levels and set slightly below this support. For short term trades set tighter stops. If you are not comfortable do not buy.
To maintain exposure to potential rises after a Sell point has been signaled a Stop Loss sell can be set marginally below the sell level.
Determine a profit target by reviewing previous resistance or support levels. Set slightly below resistance levels or substancialy below support levels. The target must provide an acceptable profit. If the profit target is reached sell, or hold and increase stop loss up and set a new profit target. If not comfortable do not buy or hold.