EMA The Exponential Moving Average (EMA) is a type of moving average that places a greater weight and significance on the most recent data points. The exponential moving average - EMA is also referred to as the exponentially weighted moving average. Exponentially weighted moving averages react more significantly to recent price changes than a simple moving average, which applies an equal weight to all observations in the period.
RSI The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.
VWAP The Volume Weighted Average Price (VWAP) is a trading benchmark used especially in pension plans. VWAP is calculated by adding up the dollars traded for every transaction (price multiplied by number of shares traded) and then dividing by the total shares traded for the day.
VOLUME SURGE A rising market should see rising volume. Buyers require increasing numbers and increasing enthusiasm in order to keep pushing prices higher. Increasing price and decreasing volume show lack of interest, and this is a warning of a potential reversal. This can be hard to wrap your mind around, but the simple fact is that a price drop (or rise) on little volume is not a strong signal. A price drop (or rise) on large volume is a stronger signal that something in the stock has fundamentally changed.
CANDLE CONFIRMATION Always look for confirmation before you act. Before acting, find independent confirmation of the predicted reversal. Only when you have confirmation should you take action. Confirmation is one of the basic techniques used by technicians to time entry and exit. Because no signal is reliable all by itself all of the time, finding confirmation in one form or another just makes sense. And many are surprised to discover that confirmation among the components of trends (price, volume, and momentum) is going to occur most of the time. In addition to confirming reversal, some “confirming” indicators contradict what the candlestick foreshadows. In this case, don’t act until you get additional confirmation or contradiction, or pick the indicator you believe to be the most reliable.
