#TradingTools101

The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes to detect overbought or oversold conditions in the price of that security.

In addition to identifying overbought and oversold securities, the RSI can also indicate securities that may be primed for a trend reversal or a corrective pullback in price. It can signal when to buy and sell. Traditionally, an RSI reading of 70 or above indicates an overbought condition. A reading of 30 or below indicates an oversold condition.

MACD

What Is MACD?

Moving average convergence/divergence (MACD) is a technical indicator to help investors identify price trends, measure trend momentum, and identify entry points for buying or selling. Moving average convergence/divergence (MACD) is a trend-following momentum indicator that shows the relationship between two exponential moving averages (EMAs) of a security’s price. MACD was developed in the 1970s by Gerald Appel, and is one of the most popular technical tools, readily available on most trading platforms offered by online stock brokers.

The MACD line is calculated by subtracting the 26-period EMA from the 12-period EMA. The calculation creates the MACD line. A nine-day EMA of the MACD line is called the signal line, plotted on top of the MACD line, which can function as a trigger for buy or sell signals.

MA

Moving Average

What Is a Moving Average (MA)?

In technical analysis, traders use various indicators to help make buy and sell decisions. One such indicator is the moving average, which helps smooth out daily price movements to help establish a trend in price by creating a constantly updated average price.

By calculating the moving average, the impacts of random, short-term fluctuations on the price of a stock over a specified time frame are mitigated. Simple moving averages (SMAs) use a simple arithmetic average of prices over some timespan, while exponential moving averages (EMAs) place greater weight on more recent prices than older ones BNB