Stock Investment Learning

The Average Directional Index (ADX) is a technical analysis indicator used to quantify the strength of a trend in a stock or other financial market. Developed by J. Welles Wilder Jr., the ADX is part of a system that also includes the Plus Directional Indicator (+DI) and the Minus Directional Indicator (−DI).   Key Points about ADX : 1. Trend Strength : ADX values range from 0 to 100. Typically:    - 0-25 indicates a weak trend.    - 25-50 indicates a strong trend.    - 50-75 indicates a very strong trend.    - 75-100 indicates an extremely strong trend. 2. Non-Directional : ADX does not indicate the direction of the trend (upward or downward); it only measures the strength of the trend. 3. Components :    - +DI: Indicates the strength of upward movement.    - -DI: Indicates the strength of downward movement.    - The ADX itself is typically plotted as a line, derived from the smoothed average of the difference b...

 RSI, or Relative Strength Index, is a momentum oscillator used in technical analysis to measure the speed and change of price movements. It ranges from 0 to 100 and is typically used to identify overbought or oversold conditions in a stock or other asset. Key Points : 1. Calculation : RSI is calculated using the average gains and average losses over a specified period, commonly 14 days. The formula is:    \[RSI = 100 - \left( \frac{100}{1 + RS} \right) \]    where \( RS \) (Relative Strength) is the average gain of up periods divided by the average loss of down periods. 2. Interpretation :    - Overbought : An RSI above 60 may indicate that an asset is overbought and could be due for a price correction.    - Oversold : An RSI below 40 suggests that an asset might be oversold and could be due for a price increase. 3. Divergence : Traders also look for divergence between RSI and price movements. For example, if prices reach new highs but RSI d...