Akin to all moving averages, the angle of the Tenkan line is very important as the sharper the angle, the stronger the trend while the flatter the Tenkan, the flatter or lesser the momentum of the move is. However, it is important to not use the Tenkan line as a gauge of the trend but more so the momentum of the move. However, it can act as the first line of defense in a trend and a breaking of it in the opposite direction of the move can often be a sign of the defenses weakening. Finding that sweet spot for risk appetite may help investors get on the correct path to conquering the markets. As companies continue to report quarterly earnings, investors will be watching which companies post larger than expected surprises. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal. When certain portfolio stocks are performing poorly, investors may be prone to chase higher return stocks or move into safer stocks. As most investors know, short-term results have the ability to be somewhat misleading. The Relative Strength Index (RSI) is an often employed momentum oscillator that is used to measure the speed and change of stock price movements. When charted, the RSI can serve as a visual means to monitor historical and current strength or weakness in a certain market.
First found on: stockvisionary.com
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