Check out complete guide about technical indicator pattern which can apply in stock, forex, crypto currency trading, including cheat sheet.
Complete Guide of Technical Indicator 2023
What is Technical Indicator?
Technical indicators are empirical or pattern-based signals generated by the price, volume and/or open interest of a security or contract used by traders who follow technical analysis. Technical analysts, or chart analysts, look for technical indicators in historical asset price data to determine entry and exit points for trades.
Below are the examples.
1.MACD(Moving Average Convergency & Divergency)
An indicator suitable for mid- to long-term investment. The idea is that the short-term moving average and the long-term moving average repeatedly get closer and farther away. The point at which the two moving averages diverge the most is considered the turning point in the market. Use the MACD line and SIGNAL line. The MACD line indicates how much the short-term moving average has diverged from the long-term moving average, and the SIGNAL line represents the average of the deviation over n days. Trading signals are identified through the absolute standard of 0 and the relative positions of the two lines.
2.Stochastic
An indicator mainly used in day trading. It tells you where the current price is between the highest and lowest prices over a certain period of time. The closer it is to 100%, the more overbought it is, and the closer it is to 0%, the more it is oversold. It is usually recognized based on 80 and 20. Another way is to buy when the %K line breaks above the %D line and sell when it breaks below.
3.Relative Strength Index (RSI)
It is an indicator that expresses the strength and direction of the trend and is suitable for use in sideways markets. It is also called the relative strength index. It calculates and displays the increase and decrease ranges. Above 70% is considered overbought, and below 30% is considered oversold.
4.Bollinger Band
An indicator that expresses the expected range of price movement in bands. It is based on the fact that stock prices fluctuate within a certain range around the moving average line. A narrow band means a sideways movement and suggests the possibility of a future trend change. Widening the band width means the trend is progressing. After setting the period to 20 and the standard deviation to 2, when the stock price leaves the band and then enters it, it is viewed as a signal of a trend change.
5.On Balance Volume (OBV)
An indicator that checks the accumulation and distribution of stocks on the premise that trading volume precedes stock prices. Based on a specific day, it is obtained by adding the trading volume on days when the stock price rose and subtracting the trading volume on days when the stock price fell. Generally, an upward trend in the OBV line foreshadows accumulation and a rise in stock prices, while a downward trend foreshadows dispersion and a decline in stock prices.
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List of all Technical Indicators
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