Chapter 5

Asking Technical Indicators for Directions


Bullet Knowing how to make the most of technical indicators in your swing trading

Bullet Identifying popular indicators and using them with chart patterns

Bullet Understanding how to use indicators to determine whether to be in or out of the market

Swing trading used to be far more difficult before the advent of charting programs — many of them now free and online — that calculate technical indicators so that you never need to pick up a pencil and figure them out by hand. In keeping with the advanced times, this chapter doesn’t linger on how to calculate indicators beyond the basic knowledge necessary to analyze them effectively and understand how price, volume, or both impact their direction. Instead, it introduces you to the popular indicators you can apply to your charts — whether you trade trends, ranges, or both.

No indicator can consistently yield profitable results on all securities under all time frames. That’s why this chapter begins with an explanation of what technical indicators are based on and when you should use them. This chapter also helps you grasp the power of combining technical indicators and chart patterns so ...

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