Technical indicators that beginners can understand! Grasp the trend in 10 minutes

1. Moving Average (MA)

The moving average is one of the most basic and important technical indicators. It helps investors determine the current market trend by calculating the average price over a certain period. Common moving averages include:

Short-term MA: such as 5-day and 10-day moving averages, representing short-term market trend fluctuations. Long-term MA: such as 50-day and 200-day moving averages, used to show long-term market trends.

How to use?

When the short-term moving average breaks above the long-term moving average, it forms a golden cross, indicating that the market may start to rise, which is a buy signal. When the short-term moving average drops below the long-term moving average, it forms a death cross, indicating that the market may start to fall, which is a sell signal.

2. Relative Strength Index (RSI)

The RSI is a technical indicator used to measure the buying and selling strength of the market, with values fluctuating between 0 and 100. Generally, an RSI below 30 indicates oversold conditions, while above 70 indicates overbought conditions.

How to use?

An RSI above 70 suggests that the market may be overbought, with a risk of price decline, suitable for selling. An RSI below 30 suggests that the market may be oversold, with potential for a price rebound, suitable for buying.

3. Trading Volume

Trading volume refers to the amount of currency traded in the market at a given time, which can help us assess market strength. Generally, trading volume should be considered alongside price for more accurate trend judgments.

How to use?

When prices rise with increasing trading volume, it indicates a strong trend with momentum for further rise. If prices rise while trading volume shrinks, it may indicate insufficient buying pressure, and the market trend may reverse.

4. Bollinger Bands

Bollinger Bands consist of three lines: the middle line is the 20-day MA, while the upper and lower bands are the upper and lower standard deviations of the middle line. When the price approaches the upper band, it indicates that the market is overbought, and prices may decline; when the price approaches the lower band, it indicates that the market is oversold, and a rebound may occur.

How to use?

A price breakout above the upper band can be seen as an overbought signal, suitable for selling. A price breakout below the lower band can be seen as an oversold signal, potentially leading to a rebound, which is a buy signal.