Basic Trading Indicators

 

1. Moving Average

A moving average is a statistic that captures the average change in a data series over time There are 2 main types of moving averages that are commonly used: 1. Simple Moving Average (SMA) 2. Exponential Moving Average (EMA)

1.1 Moving Average The simple moving average is a lagging indicator because it's based on past price data. Combine SMA with other indicators and volume. To calculate a security’s 20-day SMA, the closing prices of the past 20 days would be added up, and then divided by 20.

1.2 Moving Average An exponential moving average (EMA) is a type of moving average (MA) that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average.

1.3 Moving Average The EMA functions by producing buy and sells signals based on the crossovers and divergences it plots against the historical average. EMA defines prices trends and momentum. You can use them also as Support and Resistance.

2. MACD The Moving Average is a momentum oscillator primarily used to trade trends. It's not typically used to identify over bought or oversold conditions. It appears on the chart as two lines which oscillate without boundaries.

2.1 MACD MACD HISTOGRAM: The MACD histogram measures the distance between the two MACD curves. But visually it is very useful because it indicates if the trend is bullish or bearish. It also tells us if there is buying pressure or if there is selling pressure.

2.2 MACD RSI + MACD: MACD and RSI indicator combine very well. Both seek to identify early the creation of a bullish or bearish trend. Therefore, the analysis of only one of the indicators may be insufficient.

3. Ichimoku Cloud The Ichimoku Cloud is a collection of technical indicators that show support and resistance levels, as well as momentum and trend direction. It also uses these figures to compute a “cloud” where the price may find support or resistance in the future.

4. Fibonacci Levels The Fibonacci Levels are mainly used to know the RETRACEMENT or EXTENSION of the price of an asset. Retracements predicts where the price might pullback. Extension predicts where the price will push after breaking the initial trend.

4.1 Fibonacci Levels Fibonacci Extensions are mainly used for take profit areas or exit levels. There are two main levels that give the best for Extensions: -0.13% and -0.27% You can also use the confluence between them as "Sweet Zone"