Buy(uptrend)
.The stock is in an uptrend and cuts & goes above the 50 day MA or 200 day MA
.The MA is in an uptrend
.The parabolic Sar Dot is below price
.Preferably there is a MACD crossover at the bottom
.preferably ADX is going up above 16
EXIT
.The parabolic Sar Dot is above price
.There is a MACD crossover at the top whichever comes first
SELL(DOWNTREND)
.The stock is in downtrend and cuts & goes down below the 50 day MA or 200 day MA.
. The MA is in a downtrend
.The parabolic Sar Dot is above price
.Preferably there is a MACD crossover at the top
.preferably ADX is going up
EXIT
.The parabolic Sar Dot is below price
.There is a MACD crossover at the bottom whichever comes first
STOCK BREAKOUT
(Breakout on the upside)
.The stock is trending sideways
.There is Bollinger squeeze
.Place a buy stop above the resistance line and a sell stop below the support line
EXIT
.The parabolic Sar Dot is above price
.There is a MACD crossover at the top
(Breakout negative)
.The stock is trending sideways
.There is bollinger squeeze
.Place a buy stop above the resistence line and sell stop below the support line
EXIT
.The parabolic Sar Dot is below price
.There is a MACD crossover at the bottom
STOCHASTICS
Functions
Stochastics is a leading indicator that will provide early warning signal to warn against possible bottommost or peak price formation.
However,due to the practical investment scenarios,the stochastics may not be
Always leading in all circumstances.
In fact stochastics may at time be lagging or on par with price troughs or peaks.
Absolute levels
Based on the formula in which stochastics is being deing derived,the minimum %K can be zero and the maximum %K is 100.
Similarly, this is also true for %D albeit the minimum for %D is higer than that of %K, and the maximum for %D is lower than that of %K.
When the stochastics is in the 80% region, the corresponding price is deemed to be overbought and the possibility of price decline has increased.
Conversely, when the stochastics is in the 20% region, the corresponding price is deemed to be oversold and therefore the possibility of price reversal or a change of price trend from down to up is highly likely.
Crossovers
In fact, more important than absolute levels are the crossovers of these absolute levels by the stochastics.
When stochastics crosses the 20% level from the bottom, it indicates a bullish trading-buy signal whereas when the stochastics crosses the 80% level from the top, it indicates a bearish confirmation-sell signal.
Unlike the RSI, stochastics generate more trading signals than RSI as there are two stochastics indicators.
These crossovers can be divided into two categories:
Sequcnce of bottom scenarios
.%K crosses %D from the bottom
.%K crosses 20% from the bottom
.%D crosses 20% from the bottom-trading buy
Sequence of top scenarios
.%K crosses %D from the top
.%K crosses 80% from the top
.%D crosses 80%from the top-confirmation sell