Stochastic oscillator

will affect the RSI by creating false buy or sell signals. The RSI is best used as a valuable complement to other stock-picking tools.
• Stochastic oscillator - A technical momentum indicator that compares an instrument's closing price to its price range over a given time period. The oscillator's sensitivity to market movements can be reduced by adjusting the time period, or by taking a moving average of the result. This indicator is calculated with the following formula:
%K = 100 * [(C – L14) / (H14 – L14)]
C= the most recent closing price;
L14= the low of the 14 previous trading sessions;
H14= the highest price traded during the same 14-day period.
The theory behind this indicator, based on George Lane’s observations, is that in an upward-trending market, prices tend to close near their high, and during a downward-trending market, prices tend to close near their low. Transaction signals occur when the %K crosses through a three-period moving average called the “%D”.
• Trend line - a sloping line of support or resistance.
• Up trend line – straight line drawn upward to the right along successive reaction lows
• Down trend line – straight line drawn downwards to the right along successive rally peaks
Two points are needed to draw the trend line, and a third point to make it valid trend line. Trend lines are used in many ways by traders. One way is that when price returns to an existing principal trend line’ it may be an opportunity to open new positions in the direction of the trend in the belief that the trend line will hold and the trend will continue further. A second way is that when price action breaks through the principal trend line of an existing trend, it is evidence that the trend may be going to fail, and a trader may consider trading in the opposite direction to the existing trend, or exiting positions in the direction of the trend.