Technical Analysis and You: Finding the Perfect Fit
See how RSI helped traders anticipate Marriott stock's recent surge to new, record highs
by Nico Isaac
Updated: October 26, 2017
The other day I went shopping for jeans. When I walked into the store, the salesperson brought out over 30 styles in my size to choose from: skinny, jegging, bootcut, flare, cropped, wide leg, boyfriend, and on and on. I got so overwhelmed, I ended up leaving the store in my trusty pair of sweatpants.
Traders looking to try on a new kind of technical analysis may feel the same way. Fact is, there are literally hundreds of technical indicators out there. So, which ones are the right fit for you?
Well, for the past two decades, our Trader's Classroom instructor Jeffrey Kennedy has tested countless technical indicators, all the while developing his own, original metrics -- culminating in an airtight arsenal of 3-5 "keepers" that enable him to identify high-confidence trade set-ups ... for any market, on any time frame.
Here is a breakdown of two of Jeffrey's technical darlings:
A combination of color-coded price bars with a simple 10-period Simple Moving Average (SMA):
- Red price bars below the SMA trendline: indicates downtrend
- Gray price bars: The SMA cuts through the price bars; indicates neutral trend
- Green price bars above the SMA trendline: indicates uptrend
This is what it looks like in real life; the thin black line is the SMA:
RSI, the Relative Strength Index, in combination with the same 10-period SMA, also can help you identify a market's larger trend via these signatures:
- Uptrend: RSI stays above 65; pullbacks stay above bull-market support between 50-40
- Downtrend: RSI stays below 40; upticks stays below bear-market resistance between 50-60
On the chart above, the RSI is the squiggly blue line below the price action ... see it?
On two recent occasions, Jeffrey applied his love of these two technical indicators to the actual price chart of Marriott International stock, ticker symbol MAR.
First, Jeffrey analyzed the pullback in MAR in his August 23 Trader's Classroom video episode -- and saw a still-developing uptrend. MAR indeed took the upside, and in his September 21 Trader's Classroom video update, Jeffrey showed subscribers how the series of green bars, along with elevated RSI values, suggested the stock's uptrend was intact and easily headed to 115, a new record high.
This chart shows you the timing of Jeffrey's two bullish forecasts:
Press play to watch Jeffrey walk subscribers through both set-ups
As Jeffrey puts it: "Just as price forms Elliott wave patterns, momentum also forms patterns as well." You just should know what to look for.
If you haven't found the right technical fit for your trading needs, let Jeffrey's Trader's Classroom show you which indicators serve him well and teach you to utilize them on your own -- to seize high-confidence opportunities in the markets you follow.
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Trader's Classroom teaches you how to look at charts and spot trading opportunities for yourself. You'll get 12 video-based lessons each month that help you master the many critical aspects of finding -- and acting on -- high-confidence trading opportunities in your markets.
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