has a range from 0 to 100 and uses momentum to compare significant gains and losses of a stock.
A pair will become overbought when is above 70 and over sold when the is below 20.
Typically you don't want to buy into a stock that is over bought or above 70 , however with strong and momentum over bought stocks can also have large range moves.
A great entry can be provided when a stock breaks out and is pushed to an over bought level above 70 and after the stock pulls back and the has cooled off and gotten back under its overbought level or under 70.
Entering on an cool off and pull back can give a great risk vs reward entry and usually will have a tight range.
The opposite is true with short selling and stocks that are over sold or below 20 on the scale.
False signals to buy or sell can be formed when stocks have large spikes in price and like all technical indicators your trade plan should not solely be based on .
we must be patient before we enter our trades, because sometimes the can stay oversold for quite awhile.
The worst thing we can do is try to pick the bottom of a strong move that continues to move into further oversold territory.
So we must wait until the crosses back above 30.
Crossovers and Kisses Using the Signal Line and the Histogram
The Signal Line is used to generate trading signals. Being an of the Line,
the Signal Line will lag the . However, when the line begins to move back towards the Signal Line
then we begin to get some trading signals such as a Crossover or a Kiss.
When the Line crosses over the lagging Signal Line this is indication of a reversal. However, if the two
lines just come together and “kiss” before moving back in the same direction, this can also be a powerful
I am not a financial advisor nor am I giving financial advice.
I am sharing my biased opinion based on speculation.
You should not take my opinion as financial advice.
You should always do your research before making any investment.
You should also understand the risks of investing. This is all speculative based investing.