MOVING AVERAGES (MA)
- BULLISH SIGNAL: When the SHORT-TERM MA (e.g., 50-day) crosses above the LONG-TERM MA (e.g., 200-day), known as a "GOLDEN CROSS."
- BEARISH SIGNAL: When the SHORT-TERM MA crosses below the LONG-TERM MA, known as a "DEATH CROSS."
- LIMITATIONS: Can lag in highly volatile markets, providing late signals.
2. RELATIVE STRENGTH INDEX (RSI)
- BULLISH SIGNAL: When the RSI rises above 30 from OVERSOLD CONDITIONS.
- BEARISH SIGNAL: When the RSI drops below 70 from OVERBOUGHT CONDITIONS.
- LIMITATIONS: May give false signals in strong trends where overbought or oversold conditions persist for extended periods.
3. MOVING AVERAGE CONVERGENCE DIVERGENCE (MACD)
- BULLISH SIGNAL: When the MACD LINE crosses above the SIGNAL LINE.
- BEARISH SIGNAL: When the MACD LINE crosses below the SIGNAL LINE.
- LIMITATIONS: Can generate false signals in choppy markets.
4. BOLLINGER BANDS
- BULLISH SIGNAL: When the PRICE breaks above the UPPER BAND in a strong uptrend.
- BEARISH SIGNAL: When the PRICE breaks below the LOWER BAND in a strong downtrend.
- LIMITATIONS: Bands can widen during high volatility, making it hard to interpret signals.
5. VOLUME
- BULLISH SIGNAL: Increasing VOLUME on uptrends.
- BEARISH SIGNAL: Increasing VOLUME on downtrends.
- LIMITATIONS: Volume spikes can occur due to large trades or news events, not necessarily indicating trend continuation.
6. STOCHASTIC OSCILLATOR
- BULLISH SIGNAL: When the %K LINE crosses above the %D LINE below the 20 LEVEL.
- BEARISH SIGNAL: When the %K LINE crosses below the %D LINE above the 80 LEVEL.
- LIMITATIONS: Can produce false signals in volatile markets.
7. ICHIMOKU CLOUD
- BULLISH SIGNAL: When the PRICE moves above the CLOUD.
- BEARISH SIGNAL: When the PRICE moves below the CLOUD.
- LIMITATIONS: Complex to interpret and may give late signals in rapidly changing markets.
8. FIBONACCI RETRACEMENT
- BULLISH SIGNAL: PRICE finding support at key FIBONACCI LEVELS (e.g., 38.2%, 50%, 61.8%).
- BEARISH SIGNAL: PRICE finding resistance at key FIBONACCI LEVELS.
- LIMITATIONS: Based on historical price action, might not always predict future movements accurately.
LIMITATIONS OF TECHNICAL INDICATORS
- LAGGING NATURE: Many indicators are based on historical data and may lag behind current market conditions.
- FALSE SIGNALS: Indicators can give false signals, particularly in volatile or sideways markets.
- SUBJECTIVITY: Interpretation can vary among traders, leading to different conclusions.
- OVER-RELIANCE: Relying solely on indicators without considering market fundamentals or news can lead to poor decision-making.
Using a combination of these indicators and aligning them with fundamental analysis can improve the reliability of trading decisions.$BTC $ETH $SOL
