Welcome to Your Technical Toolkit!
Imagine you're driving a car. You could drive by just looking out the windshield, but it's much safer and smarter to also check your speedometer, fuel gauge, and GPS. Technical indicators are like the dashboard instruments of trading—they give you additional information that helps you make better decisions.
In this section, you'll learn four essential indicators that professional traders around the world use every single day. These aren't magic tools that predict the future, but they ARE powerful helpers that show you things price alone doesn't always reveal clearly.
Sa section na 'to, matututunan mo:
- Add and configure the 50-day and 200-day Moving Averages (MA)
- Understand and use the RSI (Relative Strength Index) to gauge momentum
- Read MACD signals to spot momentum shifts and potential entries
- Use Volume to confirm the strength of price movements
- Organize all four indicators on your chart in a clean, readable way
- Know the limitations of each indicator and when they work best
Part 1: Understanding What Indicators Actually Are
What is a Technical Indicator?
A technical indicator is a mathematical calculation based on:
- Price data (open, high, low, close)
- Volume data (how much was traded)
- Time (the period you're analyzing)
Here's what indicators cannot do:
- ❌ They cannot predict the future with certainty
- ❌ They cannot guarantee profits
- ❌ They don't work 100% of the time
- ❌ They don't replace good risk management
Think of indicators as helpful assistants, not crystal balls.
Part 2: Moving Average (MA) — The Trend Identifier
A Moving Average (MA) is a line that smooths out price data by calculating the average closing price over a specific number of periods.
Price is above both MAs and they're sloping upward → Strong Uptrend
Uses the last 50 days. Shows short to medium-term trend. Reacts faster to price changes.
Uses the last 200 days. Shows long-term trend. More reliable for big-picture direction.
How to Add Moving Averages in TradingView
Click the Indicators Button
At the top of your chart, click "Indicators"
Search for "Moving Average"
Choose "Moving Average" by TradingView
Set Length to 50, Type to SMA
In settings, change Length to 50 and Type to SMA
Repeat for 200-Day MA
Add another MA with Length 200 and Type SMA
Part 3: RSI (Relative Strength Index) — The Momentum Gauge
RSI is a momentum oscillator that measures how fast and strong price is moving. It shows a number between 0 and 100.
RSI at 65 → Bullish momentum, still in neutral zone
Key RSI Levels
- RSI above 70 = Overbought (price might pull back)
- RSI below 30 = Oversold (price might bounce)
- RSI at 50 = Neutral (no strong momentum)
In strong trends, RSI can stay overbought (>70) or oversold (<30) for a long time. Don't trade against a strong trend just because RSI is "extreme."
Part 4: MACD — The Momentum Shifter
MACD shows the relationship between two moving averages and helps you spot when momentum is shifting.
Key MACD Signals
- MACD crosses above Signal = Bullish crossover (momentum turning up)
- MACD crosses below Signal = Bearish crossover (momentum turning down)
- Histogram growing = Momentum accelerating
- Histogram shrinking = Momentum weakening
Part 5: Volume — The Confirmation Tool
Volume shows how much was traded during each time period.
Taller bars = Higher volume. Green = Up days, Red = Down days
Why Volume Matters
- High Volume = Strong conviction, move is reliable
- Low Volume = Weak conviction, move might be fake
Breakout + High Volume = Strong, reliable move
Breakout + Low Volume = Weak, possibly fake move
Part 7: Putting It All Together
The 4-Step Analysis Process
Is price above or below the MAs? This tells you the overall trend direction.
Is RSI overbought, oversold, or neutral? This tells you if price is moving too fast.
Did MACD cross recently? This tells you if momentum is building or fading.
Is volume high or low? This tells you if the move is strong.
Example Scenarios
Overall Assessment:
High-probability bullish setup. All indicators align.
Trade Idea: Look for pullback to 50 MA as buying opportunity.
Overall Assessment:
Strong bearish setup. All indicators align.
Trade Idea: Stay out or wait for RSI extreme oversold for bounce.
Overall Assessment:
Low-probability, choppy market. Indicators conflict.
Trade Idea: Stay out. Wait for clear trend. Don't force trades.
Practice & Reflection
- Open TradingView and search for EUR/USD
- Add: 50 MA, 200 MA, RSI, MACD, Volume
- Organize your chart so it's clean and readable
- Save your layout
For EUR/USD, BTC/USD, and Gold:
- Is price above or below the 50 MA and 200 MA?
- What is the RSI reading? (overbought, oversold, or neutral)
- Did MACD recently have a crossover?
- Is volume high or low?
- Overall: Bullish, bearish, or stay-out situation?
- Which of the four indicators makes the most sense to you right now?
- Can you think of a time when RSI being "overbought" might NOT mean you should sell?
- Why is it dangerous to trade when all indicators are conflicting?