NGX Bear Ascendency Continues Amid Mixed Sentiments, Low Valuation

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The changing market momentum, sentiments and fundamentals signalled a downturn underway, amid the corrective waves and pullbacks on the daily and weekly NGX chart as well as corporate earnings and dividend qualification/payment dates so far released. In the face of the prevailing downtrend and mixed sentiment, investors and traders need to understand how to trade, shopping for value while combining technical tools with the right market information to stay in profit across market conditions. These relative strength principles can be applied across time frames and inter-market ratios.

Momentum analysis is based on price. Those price changes can be analyzed using the same momentum principles we apply to say, the price of a stock. This is how I use RSI personally.

I know a lot of market participants out there who like using this oscillator in many different ways, looking for positive and negative reversals, changing the periods from 14 to 13 or 19, adding a smoothing mechanism to RSI to find moving average crossovers, etc. There is no right or wrong way to do this. Also, there are many other momentum indicators like MACD, ROC or Stochastics. I know a lot of really smart people who use them.

Also, momentum is just a supplement to price action, whether using RSI or any other indicator. Price is the only thing that pays and is by far the most important indicator of all. Everything else is just to supplement the analysis of price. It can be easy to forget that. Price is king so, price action reading on the chart is very important at any given time. So, see the charts, index and price action below:

NGXASI Weekly Index Action (Opening Chart)

NGX Banking Weekly Index Chart