As we creep ever-closer to the start of 2023, traders and investors are looking with anticipation at the year ahead. They will undoubtedly want to form an understanding of the trends in the markets so they can plan ahead and react correctly to the events of the year. Three key tools that aid in market breadth research are Point and Figure charts, Market Internals, and Relative Strength Index Indicators (RSI).
Point and Figure charts, or P&F charts, are used to analyse the short term trend of a market. This type of chart plots only prices, not time, and takes into account only certain intervals of price movement. It is a great indicator for short term price buildup or decrease.
Market Internals indicators measure trading activity and help traders to assess whether a market is overbought or oversold. Its readings are tracked by examining the ratio of advancing issues to declining issues over a period of time as well as the number of stocks that had volume over an average (or benchmark) level. This type of chart is incredibly useful in identifying trends and helps traders make informed decisions.
The Relative Strength Index (RSI) is a momentum indicator. It is often used as an indicator of the speed and size of a particular market’s price changes. The RSI is based on a range of 0 to 100 and is calculated by comparing the average closing price of a security over a certain number of time periods. Values above 70 indicate that the market is overbought, whereas those below 30 indicate that it is oversold.
These three tools will form a key part of investors approach to market analysis in the coming year. Knowing which stocks are overbought/oversold or are in a bullish/bearish trend can help investors to plan their strategies for the rest of 2023. With these powerful, three market breadth indicators in hand, investors can be confident in their market research and find opportunities to make informed decisions.
As we creep ever-closer to the start of 2023, traders and investors are looking with anticipation at the year ahead. They will undoubtedly want to form an understanding of the trends in the markets so they can plan ahead and react correctly to the events of the year. Three key tools that aid in market breadth research are Point and Figure charts, Market Internals, and Relative Strength Index Indicators (RSI).
Point and Figure charts, or P&F charts, are used to analyse the short term trend of a market. This type of chart plots only prices, not time, and takes into account only certain intervals of price movement. It is a great indicator for short term price buildup or decrease.
Market Internals indicators measure trading activity and help traders to assess whether a market is overbought or oversold. Its readings are tracked by examining the ratio of advancing issues to declining issues over a period of time as well as the number of stocks that had volume over an average (or benchmark) level. This type of chart is incredibly useful in identifying trends and helps traders make informed decisions.
The Relative Strength Index (RSI) is a momentum indicator. It is often used as an indicator of the speed and size of a particular market’s price changes. The RSI is based on a range of 0 to 100 and is calculated by comparing the average closing price of a security over a certain number of time periods. Values above 70 indicate that the market is overbought, whereas those below 30 indicate that it is oversold.
These three tools will form a key part of investors approach to market analysis in the coming year. Knowing which stocks are overbought/oversold or are in a bullish/bearish trend can help investors to plan their strategies for the rest of 2023. With these powerful, three market breadth indicators in hand, investors can be confident in their market research and find opportunities to make informed decisions.
