6 Fundamentals

The use of patterns on candles (e.g., the hammer, the soldiers, etc.) and indicators (e.g., EMA, MACD, etc.) are broadly defined as technical studies.

Imagine that you want to go for a swim in a pool. Say your body temperature is rising (you have a fever); in this case, the temperature rise is an indicator telling you that probably going to the pool is not a good idea.

Technical indicators are sort of the same; they provide hints upon whether investing in an stock is a good idea or not. Say there is no volume being traded in an stock with very new highs, while showing an overbought (high RSI), and there is no momentum up (e.g., very low to none Ehler’s correlation), this probably tells you that buying is not a good idea.

Fundamental indicators is another source of information used to improve the odds. In the case of the fever analogy, fundamental indicators, are like funidng out why you got sick.

There are numerous fundamental indicators that provide hints into the health of a company. This is the strategy of Warrent Buffet, which is to study companies that are undervalue (e.g., low RSI) but are solid (e.g., to big to fail, like APLE, Facebook, etc.).

Lets check over some Fundamental indicators: