Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Go To Site
  • Login
Elearnmarkets
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
Webinars
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Technical Analysis
Signals using Parabolic SAR

How to generate powerful trading signals using Parabolic SAR and RSI?

Elearnmarkets by Elearnmarkets
October 27, 2021
in Technical Analysis, Charts, Patterns & Indicators
Reading Time: 3 mins read
6
7.9k
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

Parabolic SAR is a price and time based technical analysis tool which works very well in the trending market and also identifies potential reversal and stops.

It is plotted on the price chart which appears as a dot just above or below the candlesticks or bars.

When the price is in a bearish trend, you will notice that the Parabolic SAR dots appear above the price. On the other hand, during an uptrend, you will see the dots appear below the price.

Table of Contents
Interpretation of Parabolic SAR
Trading strategy using Parabolic SAR and RSI
Bottomline

Interpretation 

Parabolic SAR is a good trend following indicator which strictly follows price.

SAR usually works like a trailing stop loss on the price chart.

In an uptrend, the SAR dots remains below the price and rises as long as the uptrend remains in place.

reliance capital parabolic sar

Once price stops going up and reverses below the SAR dots, it marks the beginning of a downtrend. Basically, in a downtrend, the SAR dots continue to remain above the price.

Some of the traders even put their stop-loss based on SAR dots.

Trading strategy using Parabolic SAR and RSI

A buy signal is generated when RSI cuts 30 level from below and the first dot of Parabolic SAR comes below the price.

Learn to make best use of RSI Indicator trading strategy in 2 HRS.

The chart below is of GVK Power and Infra and as you can see in the chart that in the first week of June when the first dot of Parabolic SAR appeared below the price and simultaneously RSI also 30  level from below, a buy signal was generated.

After the signal, the stock gave a very rapid move on the upside.

parabolic sar strategy chart

Also read: CANSLIM- the winning techno-fundamental strategy

A sell signal is generated when RSI cuts 70 level from above and the first dot of Parabolic SAR comes above the price.

You may also see the video below to understand various scans using Stockedge app.

The chart below shows that when the first SAR dot came above the price and simultaneously the RSI also cut 70 from above, it generated a sell signal. The stock gave a good correction after the sell signal was generated.

buy sell strategy chart

Bottomline

The SAR works wonderfully with the trending securities, which according to Welles Wilder occurs about 30% of the time.

Thus you will witness a lot of whipsaws when the security is a non-trending mode.

Also Read – Parabolic SAR – Calculation, Indicators & Use

Like other indicators, the signal quality will also depend upon the characteristics of the underlying security.

It should also be used in conjunction with other indicators and technical analysis techniques to generate better trading signals.

Tags: advanceenglishIndicators and oscillatorsParabolic SARrsitechnical analysis
ShareTweetSend
Subscribe To Updates On Telegram Subscribe To Updates On Telegram Subscribe To Updates On Telegram
Previous Post

Nifty And Bank Nifty At Crucial Juncture, Both End Above Respective “Make Or Break” 50 DMA

Next Post

Nifty Range Bound With Downward Bias, Awaits Breakout

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

Technical Analysis

Ultimate Guide to Certified Market Technician (CMT) Level-1

December 27, 2022
4.3k
Technical Analysis

5 Best Intraday Trading Strategies

November 3, 2022
33k
Technical Analysis

3 Trading Strategies using Average Directional Index (ADX)

January 19, 2023
9.2k
Technical Analysis

Technical Analysis in Stock Trading

January 18, 2023
4.9k

Comments 6

  1. jugal kishore bothra says:
    5 years ago

    good tool

    Reply
    • Tista Sengupta says:
      5 years ago

      Hello Jugal,

      Thank you for your comment.

      If you want to learn technical analysis from scratch you can enroll in: NSE Academy Certified Technical Analysis course on Elearnmarkets.
      Happy Learning!!

      Reply
  2. Samantha Denning says:
    4 years ago

    Great info, thanks for sharing this!

    Reply
    • Sakshi Agarwal says:
      3 years ago

      Hi,

      Thank you for Reading!

      Keep Reading

      Reply
  3. DSEETHARAMARAO says:
    1 year ago

    EXCELLENT COMBINATION. TRADING IS EASY.

    Reply
    • Sakshi Agarwal says:
      1 year ago

      Hi,

      We really appreciated that you liked our blog.

      Keep Reading!

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

Download App

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

Get Articles On Email

Enter your email address:

Categories

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

© 2022 Elearnmarkets . All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars

© 2020 Elearnmarkets All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In