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Sell when the RSI crosses below the overbought line (70).

The centerline for RSI is 50. Readings above and below 50 can give the indicator of a bullish or bearish tilt. Varying the time period of the Relative Strength Index can increase or decrease the number of buy and sell signals. Decreasing the time period made the RSI more volatile, increasing the number of buy and sell signals substantially.

RESULTS FOR RSI:

ANALYSIS:

For UltraTech Limited the value of RSI obtained is 50.80 while for ACC Limited RSI comes out to be 49.50. As RSI helps to indicate whether a security has seen more buying or selling pressure over the trading period. ACC share price value is less than 50 i.e. it is a buying signal for investor because downward trend is there while for Ultra Tech Limited whose value is above 50 is giving a selling signal to investor as it is showing a upward trend.

SIMPLE MOVING AVERAGE

The Simple Moving Average is the most popular technical analysis tool used by traders. The Simple Moving Average (SMA) is used mainly to identify trend direction, but is commonly used to generate buy and sell signals. The SMA is an average, or in statistical speak - the mean. The length of the moving average depends on the analytical objectives. Short moving averages (5-20 periods) are best suited for short-term trends and trading. Chartists interested in medium-term trends would opt for longer moving averages that might extend 20-60 periods. Long-term investors will prefer moving averages with 100 or more periods. The 200-day moving average is perhaps the most popular.

Moving Average Acting as Support - Buy Signal

When price is in an uptrend and subsequently, the moving average is in an uptrend, and the moving average has been tested by price and price has bounced off the moving average a few times (i.e. the moving average is serving as a support line), then buy on the next pullbacks back to the Simple Moving Average.

Moving Average Acting as Resistance Sell Signal

At times when price is in a downtrend and the moving average is in a downtrend as well, and price tests the SMA above and is rejected a few consecutive times (i.e. the moving average is serving as a resistance line), then buy on the next rally up to the Simple Moving Average.

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