Awesome Oscillators are tools that can be used to inspect charts that aren't trending. Trends and Moving Averages (MA) are vital when monitoring a stock's direction. When a chart isn't showing a defined trend in a particular direction, a technician will use awesome oscillators. It follows that the awesome oscillators can be at their most effective once a certain security goes into a trend that is vertical or horizontal or has no specific pattern. These awesome oscillators are very valuable when the stocks look to be oversold or overbought. These awesome oscillators will be used by a chartist to find out the time when a stock looks as though it's falling away from the upward increase and becoming overbought.
What this means is that the amount of buys has begun to drop away over a few trading days. Therefore, traders look to sell these stocks.
Awesome Oscillators - some examples
An awesome oscillator
This awesome oscillator will evaluate the margin that exists between current prices and the historical ones. The Rate of Change will increase as the price trends also rise and also declines when a downward trend occurs. The ROC's relative change will be affected by the size of the price changes.
It would be wise to pay close attention to this awesome oscillator if you want to know when a market is about to change. A current trend may stay as it is for a while even once an oversold or overbought signal has altered.
Using previous trends of this awesome oscillator it's quite normal to foresee price changes by applying them to today's market. The bar and bull markets are what creates the resistance and this creates the wave- style of the prices.
High ROC values tend to indicate an overbought stock. As an overbought or oversold market may continue in this fashion for a while, to wait for the market to move down or up may not be for the best.
MFI - yet another awesome oscillator
Lookig at another awesome oscillator, the Money Flow Index is one awesome oscillator that is calculated over a specific period of time and uses a zero to 100 range. This will show the flow of money of days that increase as a percentage of the up and down days From the view of technical analysis, taking the average of the high of the day plus the low of the day and the price at close will give the typical price. Divide this by 3 and multiply by the volume will give the money flow. Multiplied by the volume of the day gives us the money flow. Over a time frame, these totals can give a range over certain days that a typical price exceeds is a positive money flow and below is seen as a negative money flow. To get a money ratio, the positive money flow is divided by the negative money flow. The money flow percentage will be derived from the following: 100 x positive money flow / (positive + negative money flow).
This awesome oscillator has now yielded a money flow gauge that states any value over 80% means overbought but beneath 20% is oversold.
It should be pointed out that money flow is only the total dollar value of shared that have been traded and buying enthusiasm is an 'up' day and enthusiasm to sell is a 'down' day.
A reverse in price will be created if there is too extreme a move in either direction.
RSI - another awesome oscillator
The purpose of this is to map the existing and previous weak or strong points of a security market using a fairly recent trading day and the closing prices. Classed as one of the momentum oscillators, this is an awesome oscillator that will follow the speed and size of the price movement direction. This is an awesome oscillator that can work out the degree in between lower and higher close prices for the momentum.Securities showing weaker changes will not have as large a RSI as those with stronger changes.
Using a range of 0 to 100, this awesome oscillator will normally be used over a 14 day time period and 'highs' are classed as 70 and 'lows' as 30.
The Bottom Line
It becomes noticeable that these tools start to look similar. Using them in combination will become handy for knowing when to leave or join a trade. Professional traders use these awesome oscillators which is probably why they seem ahead of the game when buying and selling stocks.