Relative Strength Index (RSI):

Momentum oscillator that compares the magnitude of a stock's recent gains with the magnitude of its recent losses. The RSI ranges between 0 and 100, with 70 and 30 commonly used as overbought/oversold levels.

Divergences: Buy and sell signals can also be generated by looking for positive and negative divergences between the RSI and the underlying stock. Popular method is to look for divergence in which the price is making a new high, but the RSI is failing to surpass a previous high. This divergence may be and indication of an impending reversal. When RSI then turns down and falls below its most recent trough, it have completed a Failure Swing, which is considered a confirmation of an impending reversal.

Centerline Crossover: The centerline for RSI is 50. Readings above and below can give the indicator a bullish or bearish tilt. On the whole, a reading above 50 indicates that average gains are higher than average losses and a reading below 50 indicates that losses are winning the battle.

Moving Average Convergence Divergence (MACD):

Measures difference between two moving averages, with third MA as a trigger line. The MACD proves most effective in studying wide-swinging trading markets. Most popular MACD shows the relationship between a 26-day and 12-day Exponential Moving Average with a 9-day Exponential Moving Average (the "signal" or "trigger") line plotted on top to show buy/sell opportunities.

Signals: divergence, moving average crossover and centerline crossover. Using a combination can generate more robust signals.

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