Use the ARIMA confidence bands to determine overbought/Oversold levels. Not only. can a long position be entered when prices penetrate the lowest 95% confidence band. but they can be closed out when they return to the normal 50% level. A conservative trader will enter the market only in the direction of the ARIMA trend forecast. If the trend is up, only the penetrations of the lower band will be used to enter new long positions.
The demand for a product and the supply of that product meet at a point of equilibrium. The current price of any commodity, or any market, represents the point of equilibrium for that product at that moment in time.Because supply and demand each have varying elasticities and are best represented by curves, the point of equilibrium can shift in any direction in a market with changing factors.
Equilibrium will be an important concept in developing trading strategies. Though the supply and demand balance may not be calculated, in practical terms equilibrium is a balance between buyers and sellers, a price level at which everyone is willing to trade. although always happy Equilibrium is associated with lower volatility and often lower volume, because the urgency to buy or sell has been removed.