Part Two: How to use PSY in real cases?

Hi, mooers!

Ready for another big meal for the mind? Scroll down and get your mind full. As mentioned in previous posts, it is risky to use only one indicator to analyze the entry or exit points. The PSY (psychological line) indicator is no exception.

If you only used the PSY indicator, you could miss out on opportunities. Therefore, we need to consider it with other technical indicators to make the entry or exit decisions. Now, follow me and find out how to use the following combinations.

RSI: It is considered overbought when the RSI goes above 70 and oversold when it goes below 30. If you're not familiar with the RSI indicator, check the RSI Definition here.

When the PSY and RSI indicators fall into the oversold area, a short-term upward trend may appear. The PSY and RSI indicators release 3 bullish signals in this case. Contrarily, there are 3 clear bearish signals when the PSY is above 70 and the RSI crosses line 80.

MACD: When the DIF crosses above the DEA, it signals a bullish trend. Contrarily, it release a bearish signal when the DIF crosses under the DEA. If you're not familiar with the MACD indicator, check the MACD Definition here.

What should you do if the PSY's bearish signal contradicts the MACD's bullish signal? Some people may consider lightening up positions to see how it goes when PSY crosses line 70 and MACD is in the upward trend. Some may consider exiting to keep their profits.

If both the PSY and the MACD release a bullish signal, an upward trend may appear in a short time. Conversely, a downward trend may develop when the PSY and the MACD release a bearish signal.

After learning how to use the combinations, it may be time to put them into practice. If you have any questions, leave a comment below, and our mooers will help you find the answers. Investing doesn't have to be lonely and tedious.