A simple technical analysis setup
Over the years, my technical analysis has changed. In the beginning, I am guilty of overcrowding the chart with too many indicators. It looks more like a spider web made up of moving averages, exponential moving averages, Bollinger bands, RSI, MACD, Stochastic (fast & slow), ATR, VWAP and more. There are so many technical indicators that I could no longer see the stock candle. It is known as trying to be too smart.
Investing/trading considerations
Over the years, I've added macro and business fundamentals to my investing and trading strategies. The technical analysis is for entry and exit after the stock has reached a fair valuation with a margin of safety. We should always qualify the business fundamentals before we use technical analysis for entry/exit.
Technical Analysis (TA) of stock
The 3 components of a stock candle are price, time and volume. To cover these 3 components, I use indicators that cover price, time and volume. This is the current Technical Analysis (TA) setup that I use. Volume can be seen as the momentum of the stock price.
MACD Indicator
What Is MACD?
Chaikin Money Flow (CMF)
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Application
MACD covers price & time, and CMF covers the volume component with time. This presents a more holistic view. Chaikin Money Flow (CMF) reveals buying and selling momentum. I need both MACD and CMF to be in position before I would take a position.
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Using the Bitcoin-USD 1D chart as an example, I need the MACD indicator to complete a bottom crossover first. After that, the CMF indicator needs to trend upward before taking a “Buy” position. My time intervals are typically using a 1D or 1W chart.
Hopefully, this can be helpful. Here is wishing you all great success.
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- Xiia·07-09TOPToo many indicators, messy chart! [Facepalm]LikeReport