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How to determine Overbought or Oversold conditions in a Stock

Posted By On 9/23/2009 08:47:00 PM Under


One can use the indicator which tells the overbought and oversold condition of a stock or an index. A number of indicators are available and prominent ones are discussed:
  • Relative Strength Index and is abbreviated as RSI which exactly shows how strongly a stock is moving in its current direction. One can trade with 7 day RSI
    • to make money from market.
  • Another indicator is Stochastic Oscillator whichs hows how a stock's price is doing relative to past movements and can be in form of a Fast, Slow, and full.
  • One can even combine the Stochastics with the RSI indicator which helps one to see RSI change clearly and be called as StochRSI.
  • Williams %R is an indicator which uses Stochastics to determine overbought and oversold levels.
  • We can call an oscillator as an ultimate Oscillator provided it can combine long-term, mid-term and short-term moving averages into one number.
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