All indicators have their strengths and their weaknesses. It is important to know this for any indicator so that we can use an indicator for conditions that it is best suited for. In the case of the stochastic indicator, most people look at this as a tool to identify overbought and oversold conditions. The Stochastic indicator ranges from 0 to 100. Anything over 80 is considered to be overbought and anything under 20 is considered oversold. The typical period used is a 14 period which would represent looking at the […]

The MACD indicator is considered to be a momentum indicator. This indicator works best under trending conditions. Since it works best under trending conditions, this indicator is best used with longer time frames such as daily, weekly, and monthly. It will still work under shorter time frames such as hourly but may not be as effective. The shorter the time frame, the more chatter will typically occur which reduces the effectiveness of the MACD. This indicator is not very useful in determining overbought or oversold conditions. The MACD uses 2 […]