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Combining Oscillators with Price Patterns

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Something I like to do when trading is combine oscillators with price patterns.  I find that this helps you in out multiple different ways.

Something I like to do when trading is combine oscillators with price patterns.  I find that this helps you in out multiple different ways.

It allows you to be more accurate and only trade when I have multiple things pointing in my favor.  If I am combine a bounce off of support or a breakout with an oscillator I am increasing my odds of success.

By combining them you are buying a stock that has two sources of bullish pressures.  Historically bounces off of support and breakouts have caused massive buying.  If you combine that with the calculations of an oscillator you will have even better odds. Two bullish signals are better than one.

Even more important than that is the added confidence you can get.  By combining technical price patterns with an oscillator you feel better about the trade.  The added confidence can be just what you need to get into a trade and stick with it until your exit signal has hit it. 

Oscillators can even act as an early warning system.  They can give you a signal that a given stock is about to start turning around.  In which case they will let you exit a stock right before a massive pullback occurs. 

Now different oscillators can be used for different things.  Some tell you how strong a current trend is while others give you buy and sell signals that may be open to interpretation.  Everyone has their favorite indicator of market movements.  Personally I like the MACD.  It is simple and gives exact buy and sell signals that have been proven to work in the past.

By combining the MACD with breakouts and bounces and coupling that with a good money management system you can see higher chances of success then someone who is just buying based off of price pattern alone.

For more information about oscillators visit http://www.stocks-simplified.com/Oscillators.html

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