Technical indicators are tools that traders use to interpret market data and make decisions about buying or selling. Some of the most popular indicators include the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Moving Averages. Each one tells you something different about a stock’s momentum, trends, or potential changes.
The Relative Strength Index (RSI) measures whether a stock is overbought or oversold. It ranges from 0 to 100. If the RSI is above 70, the stock might be overbought and due for a pullback. If it’s below 30, it might be oversold and ready for a bounce. Traders use this to spot possible turning points.
MACD is a trend-following indicator that shows the relationship between two moving averages of a stock’s price. When the MACD line crosses above the signal line, it’s a bullish sign. When it crosses below, it’s bearish. It helps traders understand momentum and possible shifts in direction.
Moving averages smooth out price data to show the overall trend. A simple moving average (SMA) is the average price over a set number of days. Traders look at where the price is in relation to the average to judge the trend. Crossovers between short-term and long-term averages can signal changes in trend direction.
These indicators don’t work perfectly on their own, but when used together, they can help traders make more informed decisions. They’re especially popular with short-term traders, but long-term investors can use them too to better understand market beha
