Dear all:
something to share here about technical indicators.
Price is the main variable input in all the equations calculating technical indicators.
Let me give you a scenario.The price goes up,and because of that,the value of the indicator turns postive into a buy signal.Does this mean that the price should continue to move up because of the indicator?
If that is the case,then it becomes a cyle.Indicator give buy signal nad the price moves up.Price moves up and indicator value increase further.Indicator value increases,thus price continue to move higher.Then when will it turn?In this scenario,it can never turn because the indicator is supposed to lead the price.
Indicators cannot lead the price.Only the price can lead the indicator.It is not a two way relationship.Thus price is the detemining factor of the value of the indicator.The indicator may tell you it is a sell signal,but this will change when price change.
But when indicator change,will price change?Not necessary.
But when price change,indicator will definitely change.
something to share here about technical indicators.
Price is the main variable input in all the equations calculating technical indicators.
Let me give you a scenario.The price goes up,and because of that,the value of the indicator turns postive into a buy signal.Does this mean that the price should continue to move up because of the indicator?
If that is the case,then it becomes a cyle.Indicator give buy signal nad the price moves up.Price moves up and indicator value increase further.Indicator value increases,thus price continue to move higher.Then when will it turn?In this scenario,it can never turn because the indicator is supposed to lead the price.
Indicators cannot lead the price.Only the price can lead the indicator.It is not a two way relationship.Thus price is the detemining factor of the value of the indicator.The indicator may tell you it is a sell signal,but this will change when price change.
But when indicator change,will price change?Not necessary.
But when price change,indicator will definitely change.