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Indicators

Indicators are another technical way to analyze stocks. Where formations are more visual representations, indicators show a mathematic analysis of a stock that can be used to predict stock movement. Below are a few indicators commonly used.

Volume

The easiest of indicators to understand. Volume is simply how many shares are being bought/sold. Volume is a key indicator into showing the interest in a stock.

Relative Strength Index (RSI)

RSI is calculated on a scale of 0 to 100 and can be measured at different time intervals. A stock with an RSI over 70 is typically considered "overbought" and will likely see a downward correction. A stock with an RSI under 30 is typically considered "oversold" and will likely see an upward correction.

Moving Average (MA)

Moving average is simply an average price of a stock over a certain time period. Useful for finding areas of support, resistance, etc.

Volume Weighted Average Price (VWAP)

VWAP is an intraday indicator to show the average price at which a stock has traded using price and volume. When the current price is above the VWAP, it is typically assumed that buyers or bulls are in control and vice versa. When a stock is falling above VWAP, it can be used as a support line. When a stock is rising below VWAP, it can be an indication of an upcoming rise in price.

Moving Average Convergence Divergence (MACD)

MACD is shown as two different moving averages. When those moving averages are coming closer (converging) then the current momentum is falling off, whether it be positive or negative. When those moving averages are moving apart (diverging) then the current momentum is building.

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