Technical Indicators
Master the essential technical indicators used by professional traders to analyze price action, momentum, volatility, and volume. Learn how to combine multiple indicators for better trading decisions.
Moving Average (MA)
Smooths price data to identify trend direction. Simple (SMA) and Exponential (EMA) are most common.
MACD
Moving Average Convergence Divergence shows trend changes and momentum through line crossovers.
Bollinger Bands
Volatility bands around price showing overbought/oversold conditions and trend strength.
Ichimoku Cloud
Comprehensive indicator showing support/resistance, trend direction, and momentum at a glance.
Parabolic SAR
Dots above/below price indicating potential reversal points and trend direction.
ADX (Average Directional Index)
Measures trend strength regardless of direction. Values above 25 indicate strong trends.
RSI (Relative Strength Index)
Measures speed and magnitude of price changes. Values above 70 = overbought, below 30 = oversold.
Stochastic Oscillator
Compares closing price to price range. Shows momentum and potential reversals.
Williams %R
Momentum indicator showing overbought/oversold levels. Similar to Stochastic but inverted.
CCI (Commodity Channel Index)
Identifies cyclical trends and overbought/oversold conditions. Oscillates around zero.
ROC (Rate of Change)
Measures percentage change between current price and price N periods ago.
Momentum Indicator
Measures the rate of price change over a specific period. Positive values = bullish.
ATR (Average True Range)
Measures market volatility by calculating average price range. Higher values = more volatility.
Keltner Channels
Volatility-based envelope similar to Bollinger Bands but uses ATR instead of standard deviation.
Donchian Channels
Shows highest high and lowest low over a period. Indicates volatility and potential breakouts.
Historical Volatility
Measures how much price has fluctuated over a given period. Used for options pricing.
OBV (On-Balance Volume)
Cumulative volume indicator showing buying/selling pressure. Confirms trends.
Volume Profile
Shows volume traded at different price levels. Identifies support/resistance zones.
Accumulation/Distribution
Combines price and volume to show whether asset is being accumulated or distributed.
Chaikin Money Flow
Measures buying and selling pressure over a period. Positive = accumulation.
VWAP
Volume Weighted Average Price. Shows average price weighted by volume. Key intraday level.
MFI (Money Flow Index)
RSI weighted by volume. Shows overbought/oversold based on price and volume.
How to Use Indicators
- Confirm, Don't Predict: Use indicators to confirm what price action is showing, not to predict future movements.
- Multiple Timeframes: Check indicators across different timeframes for stronger signals.
- Combine Types: Use indicators from different categories (trend + momentum) for better confirmation.
- Avoid Over-Optimization: Too many indicators can lead to analysis paralysis and conflicting signals.
Common Mistakes
- Using Too Many: More indicators don't mean better results. Stick to 2-4 complementary indicators.
- Ignoring Price Action: Indicators are derived from price. Always prioritize what the chart is showing.
- Wrong Timeframe: Using short-term indicators on long-term charts (or vice versa) gives false signals.
- No Backtesting: Always test indicator combinations on historical data before trading live.