My toolbox is a list of technical tools that I implement in my strategies. Each of these technical tools can be used separately or together depending on the strategy, understanding the purpose of each tool and knowing how to apply them within the market is crucial to their accuracy. Below is how I personally apply these technicol tools within my toolbox.
- Fibonacci Retracement: After price makes an impulse move I use fibonacci retracements to find levels that price can end the retracement and continue back into the direction of the overall trend. The levels I use .386 .50 .764 .786 and .886 percent levels. In a strong trend I Look for price to at least retrace .386 percent of the impulse movie. Many times different triangle patterns will form around this level. The .50 and .618 I like to consider Reasonable retracement levels of the overall trend. The .764 .786 and .886 I like to use on a type of 1, 2 ,3 reversal where price makes a strong impulse move against the trend (A retracement) on this movie is where I draw the fibonacci retracement looking for price not to make a new high or low (continue trend) but rather reverse at the .764 .786 or the .886 percent level.
- Fibonacci Expansion: After price makes an impulse move and a retracement or consolidation, I then use a fibonacci expansion to find potential targets, where the next impulse move might end. Levels I use .618 - 1.00 and 1.618 percent levels. Note that a 100 percent expansion is an equal mashered move of the first impulse.
- Andrew's pitchfork: I Use andrew's pitchfork to find the slope of price. The median line I use as a gauge to the strength of that slope. If price is trading in a clear andrews pitchfork (at least 3 touches as support and/or resistance) and if price is trading below the median line then I consider it to be a weaker slop then if price was trading above the median line. these slope lines can act as support and resistance.
- Simple Moving Average (SMA): I only use the 100 and 200 DAY moving averages on a daily chart as passable support or resistance. Also to provide a longer term directional bias. If the 100 day MA Is above the 200 and price is above both then a quick longer term bios will be bullish and visa versa if the 100 day MA is below the 200 and price is below both then the longer term bios is bearish. The MA cross I would consider as a change or pasibol change in the overall trend.
- Relative Strength Index (RSI): I use Relative strength index (RSI) as a gauge of momentum and strength of the market. Also I use RSI as a trigger into a trade in certain strategies. I scale my RSI where I can see the 60 and 40 levels and use a 20 period instead of the default 14. I look at 5 levels on the RSI - 70, 60, 50, 40 and 30. If RSI is above 70 its strong bullish momentum. If Above 60 but doesn't pierce 70 bullish momentum. If bouncing from 60 to 40 I consider that a range. and visa versa for bearish momentum, If RSI is below 30, strong bearish momentum. If below 40 but can't pierse below 30 bearish momentum. Note I like to see a 40 hold on a retracement in a uptrend and 60 hold on a retracement in a downtrend. I also watch for divergence as an indication of a reversal and sometimes use trend lines on the RSI for a trigger into a trade. I do this only on a lower time frame 5 or 15 min.