Explanation of indicators

MACD (Moving Average Convergence Divergence)

• Components: MACD Line (EMA 12 – EMA 26), Signal Line (EMA 9 of MACD), and the Histogram (difference between MACD and its Signal).

• Common signals:

• Bullish crossover: MACD Line crosses above the Signal → possible buy.

• Bearish crossover: MACD crosses below the Signal → possible sell.

• Divergences: Prices rise but MACD falls → possible bearish reversal.

EMA (Exponential Moving Average)

• EMA is a moving average that gives more weight to recent prices.

• Generally, two are used:

• Fast EMA (e.g. 9 or 12): responds faster.

• Slow EMA (e.g. 26 or 50): shows overall trend.

• Key signal: When fast EMA crosses above slow EMA, it indicates bullish strength. Inverse for bearish trend.

RSI (Relative Strength Index)

• Oscillator that measures relative strength between buys and sells.

• Range: 0–100.

• 70 = overbought → correction may come.

• <30 = oversold → possible bullish bounce.

• Also useful for detecting divergences (e.g., price makes a new low, but RSI does not).

2. Combined strategy (Swing trading)

Conditions to enter LONG (buy):

1. MACD: MACD Line crosses above the Signal.

2. EMA: Fast EMA (9) > Slow EMA (21).

3. RSI: Is between 40–60 and rising, or bounces from 30.

4. Extra confirmation: Increasing volume or breaking of minor resistance.

Conditions for SHORT (sell):

1. MACD: MACD Line crosses below the Signal.

2. EMA: Fast EMA < Slow EMA.

3. RSI: Is between 60–70 and declining, or rejects 70.

3. Exit signals

• If you are in LONG:

• RSI touches or exceeds 70 and starts to turn.

• MACD flattens or crosses bearish.

• Fast EMA loses to the slow EMA.

• In SHORT:

• RSI falls below 30 and starts to bounce.

• MACD flattens or crosses above.

• Fast EMA crosses over the slow one.

For scalping (quick trades, minutes).

  • Recommended EMAs: Use a fast EMA of 9 periods and a slow EMA of 21 periods to capture micro trends.

  • RSI: Set up an RSI of 5 or 7 periods. This will give you more reactive signals to brief movements.

  • MACD: Adjust MACD to 6 / 12 / 5 (fast EMA, slow EMA, and signal). It's a more sensitive version, ideal for timeframes like 1min to 5min.

  • Suggested time frame: Work with charts from 1 to 5 minutes.

For swing trading (trades from days to weeks).

  • Recommended EMAs: Maintain the classic setup of EMA 9 (fast) and EMA 21 (slow). This helps detect sustained trend changes.

  • RSI: Use the standard of 14 periods. Detects more balanced overbought/oversold areas for medium-term movements.

  • MACD: Apply the common setup of 12 / 26 / 9, which offers a balance between sensitivity and reliability.

  • Suggested time frame: Use 1 hour, 4 hours, or daily charts.

For long term (weekly or monthly positions).

  • Recommended EMAs: Raise periods to 21 (fast) and 50 (slow) to filter noise and follow only major trends.

  • RSI: Keep 14 periods. You can extend to 21 if you seek even more stability in signals.

  • MACD: Keep the setup 12 / 26 / 9. Alternatively, you can experiment with 19 / 39 / 9 if you want even more smoothing.

  • Suggested time frame: Use daily or weekly charts.