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Trend indicators
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Momentum indicators
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Volatility indicators
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Volume indicators
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Here’s what else to consider
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Technical analysis (TA) is the practice of using historical price patterns, trends, and indicators to forecast future market movements and identify trading opportunities. However, not all TA indicators are equally reliable or suitable for every analysis. In this article, we will explore some of the most common and effective TA indicators for different aspects of your analysis, such as trend, momentum, volatility, and volume.
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1 Trend indicators
Trend indicators help you determine the direction and strength of the prevailing market trend, whether it is bullish, bearish, or sideways. Some of the most reliable trend indicators are moving averages, trend lines, and Ichimoku Cloud. Moving averages are simple calculations that smooth out the price fluctuations and show the average price over a certain period of time. Trend lines are straight or curved lines that connect the highs or lows of the price and indicate the slope and direction of the trend. Ichimoku Cloud is a complex indicator that consists of multiple lines and a shaded area that represent various aspects of the trend, such as support, resistance, momentum, and reversal.
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2 Momentum indicators
Momentum indicators measure the speed and strength of the price changes and help you identify overbought or oversold conditions, potential reversals, and entry and exit points. Some of the most reliable momentum indicators are relative strength index (RSI), stochastic oscillator, and moving average convergence divergence (MACD). RSI is a popular indicator that ranges from 0 to 100 and shows how strong or weak the price is compared to its previous levels. Stochastic oscillator is similar to RSI but also considers the closing price relative to the high-low range. MACD is a versatile indicator that shows the relationship between two moving averages and generates signals based on their crossovers and divergences.
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3 Volatility indicators
Volatility indicators measure the degree of variation and uncertainty in the price movements and help you assess the risk and opportunity in the market. Some of the most reliable volatility indicators are Bollinger Bands, average true range (ATR), and standard deviation. Bollinger Bands are dynamic bands that surround the price and indicate the upper and lower limits of the normal price range. ATR is a simple indicator that calculates the average range of the price over a certain period of time. Standard deviation is a statistical measure that shows how much the price deviates from its mean.
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4 Volume indicators
Volume indicators show the amount of trading activity and interest in the market and help you confirm the validity and strength of the price movements. Some of the most reliable volume indicators are volume, on-balance volume (OBV), and Chaikin money flow (CMF). Volume is the most basic indicator that shows how many shares or contracts are traded in a given period of time. OBV is a cumulative indicator that adds or subtracts the volume based on whether the price closes higher or lower than the previous close. CMF is an oscillator that measures the flow of money into or out of the market based on the volume and the price range.
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5 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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