Before diving into indicators, understand the basic types of charts:

  • 1. Line Chart: Shows the closing price over a time period. Candlestick Chart: The most common, shows opening, closing, high, and low prices for each time period.

Bar Chart: Similar to the candlestick chart, but less detailed. Candlesticks are the most used as they provide a clear picture of price movement. Each candle represents a time period (hour, day, week) and shows: Body: The difference between opening and closing prices. Shadows (Wicks): The highest and lowest prices during the period. Color: Green (up) or Red (down).

2. Key Technical Indicators. Technical indicators are used to analyze price movements and identify trends or entry/exit points. Here are the main ones:

A. Moving Averages: Description: Shows the average price over a specified time period, helping to smooth out fluctuations.

Types: Simple Moving Average (SMA): Calculates the average prices over a certain period (like 50 days).

Exponential Moving Average (EMA): Gives more weight to recent prices, making it more sensitive. Usage: If the price crosses above the moving average, it may indicate an uptrend.

If a short-term moving average (like 50 days) crosses a long-term moving average (like 200 days) upwards, it's called a 'Golden Cross' (bullish), and the opposite is called a 'Death Cross' (bearish).

B. Relative Strength Index (RSI): Description: Measures price momentum and ranges from 0 to 100. Usage: Above 70: Overbought (price may drop). Below 30: Oversold (price may rise). Used to identify potential reversal points.

C. MACD (Moving Average Convergence Divergence): Description: Compares two moving averages (usually 12 and 26 days) to determine momentum. Usage: When the MACD line crosses above the signal line, it's a bullish signal. When it crosses below, it's a bearish signal. Divergence between MACD and price may indicate a reversal.

D. Support and Resistance Levels. Support: A price level at which the price tends to not fall below. Resistance: A price level at which the price tends to not exceed. Usage: Identifying entry points (at support) or exit points (at resistance).

E. Volume: Description: Shows the amount of currency traded over a time period. Usage: Increasing volume with rising price confirms an uptrend. Decreasing volume may indicate a weakening trend.

W. Bollinger Bands: Description: A moving average line with two lines (upper and lower) representing the standard deviation. Usage: When the price approaches the upper line: Overbought. When it approaches the lower line: Oversold. A decrease in the distance between the two lines indicates low volatility (which may be followed by a significant move).

3. How to use indicators

Don't rely on a single indicator: Use a mix of indicators to confirm signals. For example, if the RSI indicates overbought conditions and the price is at a resistance level, that could be a strong sell signal.

Choose an appropriate time frame: Day trading: Short time frames (1 hour, 15 minutes).

Long-term investment: Longer time frames (Daily, Weekly). Experiment and Test: Use demo accounts to understand how indicators work in a risk-free environment.