Technical Indicators
Indicators turn price and volume into signals about trend, momentum and volatility. You only need a few. Pick one from each family and learn it well.
Quick reference
| Indicator | Family |
|---|---|
| Moving Averages (SMA & EMA) | Trend |
| RSI (Relative Strength Index) | Momentum |
| MACD | Momentum |
| Bollinger Bands | Volatility |
| Volume & Relative Volume | Volume |
| ATR (Average True Range) | Volatility |
| Support & Resistance | Levels |
| Fibonacci Retracements | Levels |
Moving Averages (SMA & EMA)
TrendWhat it is: Average closing price over the last N periods, drawn as a line under or over price.
Common settings: 20, 50 and 200 periods are the most watched. EMA reacts faster than SMA.
- Price above a rising 200-day average = long-term uptrend.
- Golden cross: 50-day crosses above 200-day (bullish).
- Death cross: 50-day crosses below 200-day (bearish).
Watch out: Moving averages lag. In sideways markets they produce many false crossovers.
Moving average strategy guide →RSI (Relative Strength Index)
MomentumWhat it is: Compares the size of recent gains to recent losses on a 0–100 scale.
Common settings: 14 periods. Levels 70 (overbought) and 30 (oversold).
- Above 70: stretched to the upside; below 30: stretched to the downside.
- Bullish divergence: price makes a lower low while RSI makes a higher low.
- In strong uptrends RSI often holds 40–50 on pullbacks.
Watch out: Overbought can stay overbought for weeks in a strong trend; don't short on RSI alone.
Full RSI guide →MACD
MomentumWhat it is: Measures the gap between a fast and slow average; the histogram shows MACD minus signal.
Common settings: 12-period EMA minus 26-period EMA, with a 9-period signal line.
- MACD crossing above the signal line = momentum turning up.
- Crossing above zero = the short-term trend is now above the long-term trend.
- A shrinking histogram warns that momentum is fading.
Watch out: Built from moving averages, so it also lags and whipsaws in ranges.
Bollinger Bands
VolatilityWhat it is: Bands widen when volatility rises and narrow when it falls.
Common settings: 20-period SMA with bands 2 standard deviations above and below.
- A squeeze (very narrow bands) often comes before a large move.
- Walking the upper band = strong uptrend, not automatically a sell.
- A close back inside the bands after a spike outside can mark exhaustion.
Watch out: The bands show volatility, not direction. Pair them with a trend tool.
Volume & Relative Volume
VolumeWhat it is: The number of shares traded. Relative volume = today ÷ average.
Common settings: Compare today's volume with the 10- or 50-day average.
- Breakouts on 1.5–2× normal volume are more likely to hold.
- Rallies on falling volume suggest weak participation.
- Volume spikes at lows can mark capitulation.
Watch out: Earnings days and index rebalances inflate volume without a lasting trend change.
See today's unusual volume →ATR (Average True Range)
VolatilityWhat it is: The average daily range including gaps, in price terms.
Common settings: 14 periods.
- Place stops 1.5–2× ATR from entry so normal noise doesn't stop you out.
- Rising ATR = the market is getting more volatile.
- Size positions smaller when ATR is high.
Watch out: ATR says nothing about direction; it's for risk sizing.
Position size calculator →Support & Resistance
LevelsWhat it is: Price zones where buying (support) or selling (resistance) has repeatedly appeared.
Common settings: Prior swing highs and lows, round numbers, 52-week highs and lows.
- Old resistance often becomes new support after a breakout.
- The more times a level is tested, the more it matters when it finally breaks.
- A new 52-week high has no overhead resistance from the past year.
Watch out: Levels are zones, not exact prices. Expect brief overshoots.
Stocks at 52-week highs →Fibonacci Retracements
LevelsWhat it is: Horizontal levels showing how much of a move has been retraced.
Common settings: 38.2%, 50% and 61.8% of the prior swing.
- Healthy pullbacks in a trend often stop near 38.2–61.8%.
- A break below 61.8% suggests the original move may be failing.
Watch out: Results depend on which swing you pick; be consistent.
Fibonacci calculator →A simple starter setup
- Trend: is price above or below its 50- and 200-day moving averages?
- Momentum: is RSI rising from 40–50 (uptrend pullback) or rolling over from 70?
- Levels: where is the nearest support (for your stop) and resistance (for your target)?
- Confirmation: is volume above average on the move you want to trade?
Educational information only, not investment advice. Market data may be delayed.
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