I prefer using classical technical analysis to get a perception about the markets, especially at higher timeframes. Here are a couple of charts on US Market NASDAQ Index (Daily 200 Moving Average Charts, Quarterly – Market Profile, Quarterly ADX Divergence, Quarterly Smooth RSI) with an interesting perception which indicates potentially overvalued NASDAQ charts with a greater mean reversion odds.
Nifty Futures 10 day autocorrelation turned negative for the last two days also the smooth oscillator holding near oversold zone which indicates possible mean reversion trades in nifty futures with high probability. Also looks like William VIX FIX is reversing from the peak. So very short term players can play all the long signals in the lower timeframe. And higher timeframe players can hold their longs as long the 10 day autocorrelation turns positive or the William fix started raising on the EOD charts.
Here is a simple mean reversion trading strategy using Autocorrelation and Stochastic osciallator crossover. In the last article we seen about autocorrelation that negative correlation attracts mean reversion trading and positive correlation attracts trend trading. so the whole idea of the trading system is not to take all the stochastic crossover signals. But only the long only positive crossover signals when the autocorrelation is negative.
Here is a simple mean reversion system adapted from IBS reversion edge with QuantShare. And our IBS mean reversion strategy is a slight variation of the Internal Bar Strength by taking a three day moving average to IBS (maIBS) and looking for IBS crossovers to derive the trading conditions.
Gold and Silver monthly historical charts are shown with 200MA. Both Gold and Silver had crossed the 200MA during mid of 2013. It is almost 10 years now (i.e 120 months approximately). Now the question comes to my mind is will the Biggest ever mean reversion happens in Gold and Silver?
Just a 20 EMA mean reversion concept. Any trying to spot trading oppurtunities. If there is a GAP UP or GAP down in any kind of stock
just observe it using 5 minute charts and wait for the formation of minimum three candles i.e 15 minutes.