Page 218 - THE MARKET WHISPERER

214 PART 7 - Indicators: The Trader’s Compass
In my trading platform (COLMEX Pro), as with other similar programs,

I need to click the chart to choose the type of oscillator I want to add to
the chart. As you can see, I have added a total of five features: price in
Japanese candles, the three moving averages discussed earlier (20, 50,
200), and the RSI for a 14-day period. Double-clicking any oscillator opens
a window where I can change that oscillator’s parameters: for example, its
timeframe and color on the chart. It’s that simple.
• The RSI oscillator operates on a 0-100 scale.
• Once it goes higher than 70, we need to suspect a possible overbought

status, i.e., a signal that the stock is about to drop.
• Once it drops under 30, this could be indicating oversold status, i.e., a

signal that the stock is about to reverse to highs.
• In addition to signaling the optimal buy and sell area, the oscillator also

indicates lines of support and lines of resistance even before they are
clearly seen on the chart.
Example: Finding an Extreme Point on Net Ease Daily Chart, NTES

I have added the RSI calibrated to fourteen periods to this NTES daily
candle chart for six months. Figures on the right of the chart are the
indicator reading and not the stock price. I also added the horizontal lines