When it comes to technical analysis, there’s hundreds of indicators to choose from. Out of all of them, Relative Strength Index Indicators or RSI Indicators are one of the four most popular technical indicators used by traders. They also happen to be one of my favorites.
101: Using RSI Indicators to Find Oversold Pot Stocks
RSI Indicators are part of a larger family of oscillator indicators given that it seeks to normalize price movement by creating an output value between 0 and 100.
According to Investopedia, “one way to interpret the RSI is by viewing the price as “overbought” – and due for a correction – when the indicator is above 70, and viewing the price as oversold – and due for a bounce – when the indicator is below 30.”
Personally, my favorite variation of the standard RSI is a Stochastic RSI.
201: Using Stochastic RSI Indicators to Find Oversold Pot Stocks
A Stochastic RSI indicator is “essentially an indicator of an indicator. It is used in technical analysis to provide a stochastic calculation to the RSI indicator. This means that it is a measure of RSI relative to its own high/low range over a user defined period of time.”
Boiled down, a Stochastic RSI helps provide me with even more valuable insight based off of the underlying RSI indicator.
301: Interpreting Stochastic RSI Indicators to Determine Entry Points
When you look at a Stochastic RSI chart, you’re going to see two lines that closely track each other. One is the “%K” line, and the other is the “%D” line.
%K, often referred to as the fast stochastic, is tracking the market conditions as they currently stand. %D, often referred to as the slow stochastic or the signal line, uses a predetermined look-back period to create a moving average of the %K values.
In order to best utilize the Stochastic RSI Indicator to find entry points for trades, you need to be on the look-out for crossovers, if not anticipating them. When the %K line crosses above the %D line, that is a sign that buying strength is building up in a bullish manor.
In order to find trade opportunities with the most potential for upside, I like to get in just before or just as the crossover is happening.
Why I Use Weekly Market Data
While this strategy can be used on almost any time frame, covering daily and intraday indicators would only help readers that actively day trade (and therefore have >$25,000 in their trading account). Additionally, intraday trading opportunities can come and go faster than I can write about them.
Since we’re looking for pot stocks that entered oversold territory last week to find trading opportunities for this week, we need to be using weekly charts so that the indicator matches up with the time horizon.
5 Pot Stocks that Entered Oversold Territory Last Week
- Applied Biosciences Corp. (OTC:APPB)
- Aurora Cannabis Inc. (TSX:ACB) (OTC:ACBFF)
- Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON)
- Helix TCS Inc. (OTC:HLIX)
- Village Farms International Inc. (TSX:VFF) (OTC:VFFIF)
Investing in nanocap, microcap, and small cap stocks is highly speculative. Neither I, nor the publishers of MJobserver.com are registered as Investment Advisors or Broker-Dealers in any jurisdiction whatsoever. The information contained on MJobserver.com (“this site”) has been prepared solely for informational purposes. Nothing on the site is an offer or solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities mentioned from their financial advisor.
Get Real-Time Updates from The Daily Marijuana Observer