How Do We Use It?
We use Ready. Aim. Fire! to quickly gauge whether a stock is overbought or oversold, that provides additional information as to what action we should take at major levels on the chart.
RAF works best when paired with a support or resistance level, whether that level is Darvas 2.0, a Voodoo Line, or Fibonacci extension. Because RAF shows overbought and oversold as well as generating buy and sell signals, we can use this information to understand whether a level is likely to hold or break.
The ideal condition for a major buy signal would be a stock dips in to a known support level and the RAF turns and registers a major buy. That tells us that the stock is at support and the downward momentum has turned. We want to be buying these situations.
An ideal major sell would be price moves up in to a known resistance level and registers a major RAF sell signal at the same time. This tells us that the stock has a ceiling overhead and not enough momentum to break through it at the moment. We want to be selling these situations.
RAF works on all timeframes and all markets from stocks & options to futures or forex.