Beginner lessons on the technical indicators traders actually use: SMA, EMA, RSI, MACD, Bollinger Bands, VWAP, ATR, Stochastic, and Fibonacci.
The SMA averages the closing price over the last N days. A 50-day SMA smooths out daily noise so you can see the underlying trend. Price above its SMA = uptrend bias; price below = downtrend bias.
The EMA is like the SMA but weights recent prices more heavily, so it reacts faster to new moves. Traders often pair the 12-EMA and 26-EMA to spot momentum shifts before a slower SMA would.
A Golden Cross happens when the 50-day SMA crosses ABOVE the 200-day SMA — a classic bullish signal. A Death Cross is the opposite: 50-day cutting BELOW the 200-day, often a bearish warning.
RSI is a momentum oscillator from 0 to 100. Above 70 = often overbought (a pullback may be due). Below 30 = often oversold (a bounce may be due). It doesn't predict price — it measures the speed of recent moves.
MACD = 12-EMA minus 26-EMA, plotted with a 9-EMA 'signal line'. When MACD crosses above the signal line, momentum is shifting bullish. When it crosses below, momentum is turning bearish. The histogram shows the gap between them.
Bollinger Bands wrap price between an upper and lower band set 2 standard deviations from a 20-day SMA. Bands widen when volatility rises and pinch tight when it drops — a 'squeeze' often precedes a big move.
Volume is the number of shares traded in a period. Big price moves on high volume are more trustworthy than the same move on low volume. Volume confirms — a breakout without volume often fails.
VWAP = Volume-Weighted Average Price for the day. Big institutions use it as a benchmark. Price above VWAP = bulls in control intraday; price below = bears in control. It resets every session.
ATR measures average daily price range over N periods (usually 14). It's a volatility gauge, not a direction signal. Traders use ATR to size positions and set stop-loss distances — wider ATR = wider stops.
Stochastic compares the current close to the high/low range over a lookback period, on a 0–100 scale. Like RSI: >80 = overbought, <20 = oversold. The %K line crossing the %D line is a common trigger.
Support is a price level where buyers tend to step in (the floor). Resistance is where sellers tend to appear (the ceiling). When price breaks resistance, it often becomes new support — and vice versa.
After a big move, price often pulls back to 38.2%, 50%, or 61.8% of the move before continuing. These Fibonacci levels are common spots where traders watch for bounces or reversals.
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