What are Technical Indicators?

Trading indicators are calculations that are displayed as lines on a price chart and can be used by traders to spot specific market signals and trends.

  • Examples of the leading and lagging indicators are several categories of trading indicators.
  • A forecast signal that foretells future price fluctuations is known as a leading indicator.
  • The lagging Indicator looks at the past trends and indicates momentum.


1.Simple Moving Average (SMA)

  • It is simply the average price over the specified period. And should be used on the DAILY timeframe.
  • To get a 50-period SMA, for example, add up all the price closings over the last 50 days and then divide by 50.
  • Simple moving averages of 10, 50, and 200 days are frequently used as default indicators.
  • SMAs are frequently used to identify if a trend is bullish or bearish.


2. Moving Average Convergence Divergence (MACD)

  • This technical indicator of momentum uses moving averages to determine a trend’s strength.
  • MACD crossing above zero is considered bullish while crossing below zero is bearish.
  • Also, the indicator is considered bullish when the MACD line crosses from below to above the signal line.


3. Relative Strength Index (RSI)

  • The RSI fluctuates between zero and 100, and a momentum oscillator measures the velocity and variance of price movements.
  • When the RSI crosses 70, it is generally considered overbought; when it crosses 30 or below, it is considered oversold.
  • Similar to the MACD, RSI is also used to confirm price action.


4. Volume-Weighted Average Price (VWAP)

  • A trading benchmark called VWAP provides the average Price. It traded throughout the day based on volume and Price.
  • It is also used for support, resistance, entry, and exit levels.
  • Volume-weighted average Price is only used on the intraday time frame.
  • VWAP might be as easy as purchasing an entrance at the first closing price above VWAP and selling it at a fixed price above it.


5. Bollinger Bands 

  • Three lines comprise a Bollinger Band: the middle band, a simple moving average, and the upper and lower bands.
  • The bands are dynamic/sensitive to changes in volatility. When the bands widen, price volatility increases; when the band contracts, volatility decreases.
  • A Bollinger Band comprises three lines: the upper and lower bands, the center band, and a simple moving average.


6. Ichimoku Cloud

  • Technical indicators that display momentum and support and resistance levels are gathered under the Ichimoku Cloud—& trend direction. When the price is below the cloud, consider bearish.
  • When the price is above the cloud, consider bullish.
  • The lines include a 9-period average, a lagging closing price line, a 26-period average, an average of those two averages, and a 52-period average.


7. Pivot Points

  • They’re calculated based on previous trading sessions’ high, low, and closing prices.
  • Pivot Points predict support and resistance levels in the current or upcoming session.
  • This indicator automatically graphs 7 Pivot Point levels: R1, R2, R3, S1, S2, S3, and P.


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