The indicator was developed by Avrum Soudack and Gene Quong as a volume-weighted variation of the RSI. The RSI may be used to help spot points of reversals more accurately. This money flow ratio is what is pushed into an RSI formula to create a momentum indicator. Dedicated investors may be looking to employ another tool for doing technical stock analysis.
After a recent check, shares of Direxion Daily S&P Biotech Bull 3X ETF (:LABU) have been seen trading -7.26% off of the 50-day high and 39.82% away from the 50-day low. 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. Many traders will use the ADX alongside other indicators in order to help spot proper trading entry/exit points. A CCI reading closer to +100 may indicate more buying (possibly overbought) and a reading closer to -100 may indicate more selling (possibly oversold). At the time of writing, the 14-day ADX for Direxion Daily Cyber Security & IT Bull 2X Shares (HAKK) is 17.47. In general, an ADX value from 0-25 would indicate an absent or weak trend. In general, if the reading goes above -20, the stock may be considered to be overbought. Current levels place the share price around 18.17, while the MACD indicates a bullish trend. The indicator is non-directional meaning that it gauges trend strength whether the stock price is trending higher or lower.
Interested traders may also be keeping an eye on the Williams Percent Range or Williams %R.
Many traders will use a combination of moving averages with different time frames to help review stock trend direction.
Direxion Daily S&P 500 Bull 3X Shares (SPXL)'s Williams Percent Range or 14 day Williams %R now sits at -25.56.
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The MFI was created by Gene Quong and Avrum Soudack and they believed a reading above 70-80 would signify Overbought territory where a reading below 20-10 would indicate that the conditions were indicative of an Oversold price level. A reading under 30 may indicate that the stock is oversold, and possibly undervalued. After a recent check, the 14-day RSI for Direxion Daily Real Estate Bear 3X Shares ETF is now at 50.91, the 7-day stands at 55.06, and the 3-day is sitting at 52.08.
The Average Directional Index or ADX is a popular technical indicator created to help measure trend strength. When the RSI line moves up, the stock may be experiencing strength. The RSI may be useful for spotting abnormal price activity and volatility. As a momentum oscillator, the RSI operates in a set range. Readings may range from 0 to -100.
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. On the flip side, many investors may hold onto stocks for far too long after they have slipped drastically. Wilder introduced RSI in his book "New Concepts in Technical Trading Systems" which was published in 1978.
Taking a peek at some Moving Averages, the 200-day is at 28.24, and the 50-day is 21.67. Moving averages may also function well as a tool for determining support and resistance levels. The 50-day is 36.12, and the 7-day is sitting at 37.56. Although it was originally intended for commodity traders to help identify the start and finish of market trends, it is frequently used to analyze stocks as well.
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