Technical Analysis Part 3

 Pls download my chart for better understand

https://www.dropbox.com/s/emen0ke9i5hq50z/stochastic.gif?m

 https://www.dropbox.com/s/ble3co86ipukbdh/New-Picture-%286%29.gif?m

*Stochastic : It is a momentum indicator. It is developed by the Dr Gorge Lane in 1950.It provides the trader the location of a current  price and a relation of the price range over the periods. It calculated where high, low, close price and and %D of 3EMA of K% and %D of slow EMA %D. It's formula = %K = 100[{C -L14)/(H14 - L14).
It displays the over bought and over sold area. Traders usually enter trades by stochastic when price is overbought/oversold area (above 80 scale and below 20 scales)

*RSI (Relative strength index): It is developed by J. Welles Wilder in 1978.It's a momentum indicator. It measures volatility and direction of price movement over a period. Generally 14 day time frame measure 0 to 100 scale where 30 and 70 scale show price oversold and overbought condition. Wilder recommended 14 EMA smoothing periods. Wilder also believed that divergence between RSI and price action is also a strong clue market turning point.

*Parabolic Sar ( Stop & Reversal)  : It's a trade following indicator mean lagging indicator. It also developed by J. Wilder. It finds potential reversals of the price direction. The sar is calculated one period in advance using present data. The Extreme Point value is set off 0.02 in parabolic sar. When the market up trading or preparing up then sar point you find below the candlesticks and vice verse. But be careful you may be mislead so wait for 3 dots above or below and then enter a trade. If dots below buy signal and above then sell signal.