Indicators Overview
Technical indicators help traders analyze price data and market conditions. Each provides different insights into momentum, trend, and volatility.
Relative Strength Index (RSI)
The RSI is a momentum oscillator that measures price changes on a 0–100 scale. Typically, RSI readings above 70 indicate overbought conditions and below 30 indicate oversold. Traders often use RSI to spot potential reversal points when an asset is unusually overvalued or undervalued.
Moving Average Convergence Divergence (MACD)
MACD is a trend-following momentum indicator that uses two exponential moving averages (EMAs) to help evaluate price momentum. It is calculated by subtracting the 26-period EMA from the 12-period EMA. A nine-period EMA of the MACD line (the "signal line") is often used for observing crossover patterns.
Bollinger Bands
Bollinger Bands consist of a simple moving average (usually 20-period) and upper/lower bands set two standard deviations away. The bands widen or contract with market volatility. When price moves outside the upper or lower bands, it suggests overbought or oversold conditions.