Track oscillators. Oscillators help identify overbought and oversold markets. While
moving averages offer confirmation of a market trend change, oscillators often help
warn us in advance that a market has rallied or fallen too far and will soon turn.
Two of the most popular are the Relative Strength Index (RSI) and Stochastics.
They both work on a scale of 0 to 100. With the RSI, readings over 70 are
overbought while readings below 30 are oversold. The overbought and oversold
values for Stochastics are 80 and 20. Most traders use 14-days or weeks for
stochastics and either 9 or 14 days or weeks for RSI. Oscillator divergences often
warn of market turns. These tools work best in a trading market range. Weekly
signals can be used as filters on daily signals. Daily signals can be used as filters for