A combination of Stochastic and RSI indicators

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(Strength indicator)

The strength indicator will also be explained gradually.

Today, I would like to talk about how to interpret the indicators consisting of the Stochastic indicator and the RSI indicator.


It is set as below.
1. RSI indicator
ta.ema(rsi, 14)
For the setting value of the RSI indicator, we used the most frequently used value of 14.

2. Stochastic indicators
ta.sma(ta.stoch(close, high, low, 20), 12)
As the setting values of the stochastic indicator, as shown in the above formula, the setting values of 20 and 12 were used.


An important way to interpret
1. Stoch > RSI: likely to show an uptrend
2. Stoch < RSI: likely to show a downtrend

but,
1. If the Stoch indicator rises below 30, it is likely to show an uptrend.
2. If the Stoch indicator falls above 70, it is likely to show a downtrend


thus,
1. When Stoch > RSI, start split buying.
2. When Stoch < RSI, start split selling.

In that sense, I used the fill function to make it appear orange (#ff9800) when it is rising, and blue (#00bcd4) when it is falling.


It's best to understand the detailed information about all the indicators and use them, but be careful because if you study too deeply, your thoughts can become trapped in them.

Therefore, unless you are going to create a new indicator by directly utilizing the formula, it is recommended to understand and use only the core interpretation method of the indicator.


Since the stochastic indicator is an indicator of the price position within a certain period of time, it is recommended to use a set value suitable for your investment period, as it can indicate different results depending on how you set the set value.

As I said above, I used the settings of 20, 12.


The RSI indicator is an indicator of strength.

Therefore, when the price enters the overbought zone, the uptrend is at its highest, so once it exits the overbought zone, the likelihood of a downtrend increases.

Conversely, when the price enters the oversold zone, the downtrend is at its highest, so once it exits the oversold zone, it is likely to show an uptrend.

Therefore, it is not recommended to react in advance by thinking that price volatility will inevitably occur when a stock enters an overbought or oversold zone.

The key to the RSI indicator is to respond when it enters the oversold zone and exits the oversold zone, and when it enters the overbought zone and exits the overbought zone.

This is because if a full-fledged uptrend has begun, the RSI indicator may remain in the overbought zone.

Therefore, it is not a good idea to judge the situation based on all indicators alone.


The above is not a big deal, but I think it is a combination of indicators that makes it very intuitive to know whether or not the chart you are looking at is a chart you can start trading with.

We will go into more detail when we discuss how to find support and resistance points for that indicator.

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** All descriptions are for reference only and do not guarantee profit or loss in investment.

** Even if you know other people's know-how, it takes a considerable period of time to make it your own.

** This is a chart created with my know-how.

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