Simple Delta 3 - a quick general future price movement indicator
Between three key indicators, namely the Accumulation/Distribution indicator, Bollinger Bands, and the Stochastic RSI, we can ascertain a quick general overview as to where price and sentiment will move towards in the short term. Such indicators are quite technical in their make-up, however their output give strong indications.
The Accumulation Distribution Indicator helps predict future price changes using the relation between the asset's price and volume.
If this indicator is moving up, it suggests that the price will move up even if the price chart shows it is moving down. The same can be ascertained when the Accumulation Distribution indicator is decreasing, showing price will move down (again, even if price chart shows an increase).
Bollinger Bands give investors a higher probability of properly identifying when an asset is oversold or overbought.
The bands give no indication when the change may take place or which direction price could move. The closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market. A squeeze signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities. Conversely, the wider apart the bands move, the more likely the chance of a decrease in volatility and the greater the possibility of exiting a trade.
A Stochastic RSI reading above 0.8 is considered overbought and suggests the RSI may be reaching extreme highs and could be used to signal a pullback in the underlying security. A reading below 0.2 is considered oversold and the short-term direction of the underlying security may be nearing a low and signal a possible move higher. On the zero to 100 scale, above 80 is overbought, and below 20 is oversold.
Overbought doesn't necessarily mean the price will reverse lower, just like oversold doesn't mean the price will reverse higher. Rather the overbought and oversold conditions simply alert traders that the RSI is near the extremes of its recent readings.
So between:
Accumulation/Distribution giving an indication as to which direction price is moving;
Bollinger Bands giving an indication as to when there is high/low volatility; and
Stochastic RSI giving an idea of when the underlying security is overbought or sold which in turn may signal price reversals,
We can rate the probability at which way the short term price of the underlying security will move towards with increased confidence.
The Accumulation Distribution Indicator helps predict future price changes using the relation between the asset's price and volume.
If this indicator is moving up, it suggests that the price will move up even if the price chart shows it is moving down. The same can be ascertained when the Accumulation Distribution indicator is decreasing, showing price will move down (again, even if price chart shows an increase).
Bollinger Bands give investors a higher probability of properly identifying when an asset is oversold or overbought.
The bands give no indication when the change may take place or which direction price could move. The closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market. A squeeze signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities. Conversely, the wider apart the bands move, the more likely the chance of a decrease in volatility and the greater the possibility of exiting a trade.
A Stochastic RSI reading above 0.8 is considered overbought and suggests the RSI may be reaching extreme highs and could be used to signal a pullback in the underlying security. A reading below 0.2 is considered oversold and the short-term direction of the underlying security may be nearing a low and signal a possible move higher. On the zero to 100 scale, above 80 is overbought, and below 20 is oversold.
Overbought doesn't necessarily mean the price will reverse lower, just like oversold doesn't mean the price will reverse higher. Rather the overbought and oversold conditions simply alert traders that the RSI is near the extremes of its recent readings.
So between:
Accumulation/Distribution giving an indication as to which direction price is moving;
Bollinger Bands giving an indication as to when there is high/low volatility; and
Stochastic RSI giving an idea of when the underlying security is overbought or sold which in turn may signal price reversals,
We can rate the probability at which way the short term price of the underlying security will move towards with increased confidence.