I will explain to you the “basic trading indicators”
1. Fibonacci Levels
2. RSI
3. Stochastic
4. MOTHER
5. Volume
1. Fibonacci Levels
Fibonacci retracement is used to find areas of resistance and support on a chart.
Fibonacci ratios are used as percentages.
Fibonacci retracement level applies percentages to the downside
Fibonacci extension applies percentages to trend reversal
1.1 Fibonacci Levels
Fibonacci retracement is often combined with indicators such as RSI or Elliott Wave Theory.
These indicators combined with the RSI can be very useful. Finding connections between wave structures and potential resistance and support areas.
1.2 Fibonacci Levels
In an uptrend, Fibonacci extensions are used to set profit targets.
Common Fibonacci extension levels are 61.8%, 100%, 161.8%, 200%, and 261.8%.
In a downtrend, the Fibonacci retracement uses the following ratios: 23.6%, 38.2%, 50%, 61.8% and 78.6%
2. RSI
The value of the Relative Strength Index is the one based on the last 14 candles of this TF. Measures the momentum (bullish or bearish) of the last 14 candles.
The RSI value will be closer to 70 when the price is overbought and 30 when it is oversold.
2.1 RSI
Overbought Zone: A high RSI, usually above 70, indicates that the price is overbought and the market is likely to push it lower.
Use pricing channels such as Bollinger Bands to confirm the signal generated by the RSI.
Focus on HIGH TF (4H-1D) when using RSI.
2.2 RSI
Oversold Zones: On the other hand, oversold zones are located between RSI levels 0 and 30.
Don't accumulate on 30, wait for the price to drop. Buying in this range on HTF levels will make you profitable in the long run.
3. Stochastic
The Stochastic Oscillator is range bounded, meaning it is always between 0 and 100.
It is therefore a useful indicator of overbought and oversold conditions. It also measures the price momentum of an asset to determine trends and predict reversals.
3.1 Stochastic
It is useful for predicting trend reversals and identifying profitable entry and exit points. This indicator should be combined with the price action you are monitoring.
4. Moving averages
A moving average is a statistic that captures the average change in a data series over time. There are two main types of moving averages commonly used:
1. Simple Moving Average (SMA)
2. Exponential Moving Average (EMA).
4.1 MOTHER
1. EMA: Sensitive to recent price movements. Ideal for short-term trading analysis
2. SMA :
treats all data points equally, commonly used for long-term analysis
5. Volume
Low trading volume may indicate a lack of interest in buying or selling.
Low volume in a downtrend is bullish.
High trading volume that accompanies a price increase may signal an uptrend.
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