Best Technical Indicators for Long Term or Positional Trading

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In stock market, technical indicators are mainly used for intraday trading or options trading, but they can be used to enter into positional trades or for long-term trading. Fundamental analysis is considered mainly for long-term investment but many investors still use technical analysis or technical indicators to buy a stock at the lowest price or at the best point to get the maximum returns.

In technical analysis, you can find multiple technical indicators available that you can use for day trading or short-term trading. But for positional trading, only a few indicators are more useful and can give you a more reliable indication to enter or exit from the positional-based trade positions. So, right here we are going to discuss about the best indicators for positional trading or you can sue for long-term trading.

Best Indicators for Positional Trading:

Exponential Moving Average

Exponential Moving Averages (EMV) is one the most popular technical indicator that can be used for various time horizons. Based on trading time perspective or how long you want to keep your trade positions you can adjust its parameters or values taken to find out the average price for various days.

The 50-day moving average is one of the best moving averages for positional trading, and you can also use it for long-term trading. However, the 50-day moving average line is used in combination with both 100 and 200-day moving averages as a factor to interpret the crossovers.

When the 50-day moving average line crosses the 100-day and 200-day moving average lines from below, it means a bullish trend is likely to start. While the fast-moving average line (50-day EMA) crossing the slow-moving average line from above shows a bearish trend. You can use these indications to enter into your long-term trade position with the perspective of getting returns from such crossover.

Support and Resistance

It is another very useful technical indicator suitable for positional trading. This indicator simply tells where the market or stock price is taking the support when it goes down and where it is taking the resistance while moving upward direction. These two are crucial points which not easily broken by the price, as these points work as the entry and exit points for the traders.

The resistance works like a confrontation where the stock price stops or turns back or struggles to break out unless there is huge volume or when buyers dominate the sellers. You can use this point to book profits in your long-term or positional trade position or go for short-selling to earn profits when the price comes down.

Similarly, the support works as a base point where a falling stock price stops or turns back into the uptrend or it can consolidate. You can use this point as a buying level to enter into a long trade position or book profits in your short positions. A stock price might consolidate at this point before heading towards in any direction. However, when sellers dominate the buyers, the stock price can break down the support levels and further move in the downward direction showing a negative trend.

Stochastic Relative Strength Index

The stochastic RSI (Relative Strength Index) indicator is the combination of RSI and Stochastic Oscillator that oscillates between the range of 0 and 1. This range is used to identify if the market or stock price is trading in the overbought or oversold zone. It is a momentum-based technical indicator that can help you in positional trading to catch the stock when moving in the overbought or oversold trading zone.

If stochastic RSI is reading above 0.8 it means the price is overbought, while on the other hand when this indicator is reading below 0.2, then it is considered oversold. The turning back of the price while trading in the overbought zone is considered a bullish trend. While the overbought situation is an indication of a downtrend likely to come in the coming days. However, you should confirm the price fluctuation and then take the right action of trade.

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