In this THREAD, I'll break down four fundamental indicators that every trader should know. These tools help you make informed decisions in the volatile world of trading.đ§”
1. RSI (Relative Strength Index) đ What it Does: Reflects the strength between uptrends and downtrends.
Key Levels: - 30: Indicates oversold conditions. - 70: Indicates overbought conditions. - 50: Signals a lack of trend. Trend Lines: - Uptrend Line: Connect two or more peaks for a rising trend. - Downtrend Line: Connect three or more peaks for a descending trend.
Divergence: - Bullish Divergence: Price forms lower highs, but RSI shows horizontal or higher points. - Bearish Divergence: Price forms higher highs, but RSI shows lower points.
2. MACD (Moving Average Convergence Divergence) đ What it Does: Measures the convergence and divergence of two moving averages.
Signals: - Bullish: When the MACD line crosses above the Signal line. - Bearish: When the MACD line crosses below the Signal line.
MACD Histogram (MACDh): Visual tool showing the distance between the MACD curves; indicates buying or selling pressure.
3. TD9 Indicator đ Purpose: Identifies trend exhaustion and turning points. Signals: - Buy Signal: 9 consecutive bars close lower than the 4th previous bar. - Sell Signal: 9 consecutive bars close higher than the 4th previous bar.
4. Bollinger Bands đ What it Does: Compares price changes over time.
Key Concepts: - Squeezing: Bands narrow, indicating a potential breakout. - Widening: Indicates the start of a new trend. - Breakouts: - Upper Band Convergence: Bullish breakout. - Lower Band Convergence: Bearish breakout.
This thread offers a quick overview of four of the most commonly used trading indicators. Each of these tools provides valuable insights into market trends and price movements, helping you make better trading decisions. đĄ Next up: How to draw a 0 chart. If you found this helpful, please RT and FAV to keep the knowledge flowing for free! đ #Learning #RSI #TechnicalAnalysis