Technical indicators help traders analyze price trends and make informed decisions. Let’s explore the most commonly used ones:
🔹 *Moving Averages (MA)*
- Smooth out price data to identify the trend direction.
- Types: Simple MA (SMA), Exponential MA (EMA)
- e.g., 50 MA or 200 MA helps spot trend continuation or reversals.
🔹 *Relative Strength Index (RSI)*
- Measures momentum and overbought/oversold conditions.
- RSI > 70 = Overbought (possible reversal down)
- RSI < 30 = Oversold (possible reversal up)
🔹 *MACD (Moving Average Convergence Divergence)*
- Shows trend strength and momentum shifts.
- Look for signal line crossovers and histogram changes.
🔹 *Bollinger Bands*
- Volatility indicator; price tends to bounce between the bands.
- Tight bands = Low volatility; Wide bands = High volatility.
🎯 *Pro Tips:*
- Don’t rely on one indicator—combine with candlesticks or support/resistance.
- Use them to confirm your trading strategy, not replace it.
- Always manage risk.
Next up: Lesson 6 – *Support & Resistance Zones*
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