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TECHNICAL ANALYSIS
MODULE 2: THE BEST TECHNICAL INDICATORS
LEARNING MATERIAL – TAKEAWAY NOTE

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Trading with Support and Resistance
• Buy at support and sell at resistance
Sell @ Resistance Level • Support and resistance levels can indicate
a major direction change in a stock that is
trending
• A stock that is breaking support or
Buy @ Support Level resistance levels, especially on heavy
volume, could be setting up for a major
move
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Trading Fibonacci Lines and Extensions
• Fibonacci lines are a technical indicator
devised from a ratio discovered by Leonardo
Fibonacci, an Italian mathematician
• The lines, when displayed on a trading chart,
give likely support and resistance levels for a
stock based on prior price action

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Trading Fibonacci Lines and Extensions
• The Golden Ratio, which can be found in
nature, music, language, and finance, is

Golden Ratios 1.618

in Trading
• The levels in the Fibonacci sequence which
are used in trading are 38.2%, 50%, and
61.8%

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Exponential Moving Average (EMA)
• A simple moving average is calculated by
adding together prices in a given time frame
and dividing by the number of time frames
• The EMA is a weighted moving average, giving
more importance to near term prices

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Exponential Moving Average (EMA)
• By using two EMAs with different time frames
we get an indicator when the fast line or signal
line (lower number of time frames) crosses the
Golden Cross
slow line (higher number of time frames)
• A golden cross is when a short time frame
crosses a much larger time frame

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Parabolic SAR (PAR SAR)
• It’s best used in a trending market, and will give
false positive signals in a sideways market
• The indicator is represented by a series of dots
below the price in a bullish trend and above the
price in a bearish trend
• The indicator is best used as a way to set a stop
when a trader is riding a trend

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Moving Average Convergence Divergence (MACD)
• The MACD is calculated by subtracting the 12-day
EMA from the 26-day EMA, and combining this
with a 9-day EMA (signal line) and a zero line
• A cross by the 9-day signal line to the upside is
bullish, and to the downside is bearish
• A cross above the zero line is bullish and a cross
below the zero line is bearish

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MACD Divergence Signal
• When the stock price moves higher as the
MACD moves lower, this is a divergence of the
MACD from the stock price and indicates a
possible trend change
• When the stock price moves lower as the
MACD moves higher, this indicates a trend
reversal signal

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Relative Strength Index (RIS)
• RSI is a momentum indicator that measures the
magnitude of recent price changes to identify
an overbought or oversold condition
• The formula for RSI is RSI = 100 – 100 / (1 + RS),
with a 14 period default time frame
• RSI values range from 0 – 100 with 70 being
overbought and 30 being oversold

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Relative Strength Index (RIS)
• Since RSI is measuring recent price it is a
momentum indicator
• Some traders use 80 and 20 as their signal line
to avoid false signals, and use RSI along with
other indicators and chart patterns

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THANK YOU FOR WATCHING!

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