🌀🌀From today's market situation, the indicators have already given hints. Although indicators have lag, entering at the second pillar can still yield profits. I believe those who entered based on indicators are already making a fortune. True speculators do not enter blindly but wait for opportunities to accurately cut in through market cracks.🌀🌀
🌈🌈Many students still do not understand the meaning of indicators. Today, I will summarize. I hope everyone can understand each set of data without having to buy courses, make precise predictions using indicators, and that sharp speculators are always more accurate than grid traders.🌈🌈
🔵🔵 Core indicator explanation (Chinese-English comparison)
1️⃣ Basic Indicators
- Volume:
Reflects the level of market activity. A volume increase on a price rise (price up + volume increase) is more credible, while a volume decrease on a price drop (price down but low volume) may be a false breakout.
- MA (Simple Moving Average):
Directly calculates the average price over a certain period (e.g., MA20 = mean of the last 20 closing prices).
Features: Equal weight on historical data, smooth trend but lagging.
- EMA (Exponential Moving Average):
Gives more weight to recent prices, reacts faster to price changes than MA.
Applicable scenarios: short-term trading (e.g., EMA12/EMA26 combination).
- Difference between MA and EMA:
EMA is more sensitive, suitable for capturing early trend signals; MA is more stable, suitable for confirming trends.
2️⃣ Trend Indicators
- BOLL (Bollinger Bands):
Composed of three lines: middle track (MA20), upper track (MA20+2 standard deviations), lower track (MA20-2 standard deviations).
Usage:
- Price touching the upper band may be overbought, touching the lower band may be oversold;
- Narrowing Bollinger Bands indicate an impending trend change (volatility increase).
- SAR (Parabolic Stop and Reverse):
Displayed as dots below or above the K line, used to judge trend reversals.
Rules:
- Price above SAR point → upward trend, go long;
- Price below SAR point → downward trend, go short.
- MACD (Moving Average Convergence Divergence):
Composed of fast line (DIF), slow line (DEA), and histogram.
Usage:
- Golden Cross (DIF crosses above DEA) → long signal;
- Death Cross (DIF crosses below DEA) → short signal;
- Histogram highs and lows reflect momentum strength.
3️⃣ Ranging Indicators
- RSI (Relative Strength Index):
Measures the speed of price change, range 0-100.
Usage:
- RSI >70→overbought (take profit or go short), may pull back;
- RSI <30→oversold (stop loss or go long), may rebound;
- Divergence: New price highs but RSI does not make new highs → trend reversal warning.
🔅🔅 Overbought and oversold are terms in technical analysis, and their relationship with operational direction is as follows:
- Overbought (RSI >70): Price has risen too fast in the short term, may pull back → Beware of going long, consider taking profits or going short.
- Oversold (RSI <30): Price has fallen too sharply in the short term, may rebound → Beware of going short, consider stop losses or going long.
✴️Simple Summary:
- Overbought ≠ long, but rather reminds “don't chase prices”;
- Oversold ≠ short, but rather reminds “don't panic sell”.
Need to judge in conjunction with the trend (for example, in an uptrend, overbought may continue, just a short-term pullback).
- KDJ (Stochastic Indicator):
Composed of K line, D line, and J line, reflecting the price position within the cycle.
Usage:
- K/D >80→overbought, <20→oversold;
- K line crosses above D line → Golden Cross (go long), crosses below → Death Cross (go short).
- WR (Williams %R):
Similar to RSI but calculated differently, range 0-100.
Usage:
- WR >80→oversold, <20→overbought;
- Must be used in conjunction with trends (in a downtrend, oversold may continue to fall).
- Stoch RSI (Stochastic RSI):
Conduct a stochastic calculation again on RSI, making it more sensitive to capture reversal signals in advance.
Difference from RSI:
- Stoch RSI has greater fluctuations, suitable for short-term;
- RSI is more stable, suitable for medium to long-term.
🔵🔵 How to combine indicators to determine short-term direction?
🔅🔅 Core Principle:
Multiple indicator resonance + trend priority + risk control
1️⃣ First, look at the long-term trend (e.g., 4-hour/daily):
- Long-term upward trend, short-term pullback may be a long opportunity;
- Long-term downward trend, short-term rebound may be a shorting opportunity.
2️⃣ Multiple indicator cross-validation (taking long as an example):
- Trend confirmation: Price above MA/EMA, and EMA golden cross;
- Momentum validation: MACD histogram expands, RSI rises from the oversold zone (>50);
- Volatility assistance: Price retraces to the lower Bollinger Band and rebounds, with increased volume;
- Reversal signal: Stoch RSI golden cross from the oversold zone.
3️⃣ Practical Case (Going Long on 15-minute Cycle):
- Step 1: 4-hour chart EMA bullish arrangement (EMA12>EMA26>EMA50);
- Step 2: 15-minute chart price retraces to BOLL middle track (MA20) without breaking, while RSI rises from 40 to 55;
- Step 3: MACD forms a golden cross above the zero line, volume suddenly increases;
- Step 4: SAR point flips to below the K line, confirming trend reversal;
- Entry: Price breaks the previous K line high, stop-loss set at the previous low.
🔵🔵 Notes
1️⃣ Avoid overfitting:
The more indicators, the easier it is to create contradictions. It is recommended to choose 2-3 complementary indicators (e.g., MACD+RSI+BOLL).
2️⃣ Distinguish market states:
- In a trending market: MA/EMA+MACD is more effective;
- In a ranging market: RSI/KDJ+BOLL is more effective.
3️⃣ Contract Trading Risk Control:
- Leverage should not be too high (recommended ≤10x);
- Stop-loss must be set (such as breaking critical MA or previous low point);
- Profitable parts can be taken in batches (e.g., use trailing stop-loss to protect profits).
🔅🔅 Summary:
- Recommended short-term trading indicator combination:
EMA (12/26) + MACD + RSI + Volume
1. EMA golden cross + MACD histogram expands → trend confirmation;
2. RSI leaving the overbought/oversold zone → momentum validation;
3. Volume increases → signal credibility improves.
🔅🔅Ultimate Advice:
All indicators are statistical results of historical data; a single indicator cannot predict the future with 100% accuracy. It is crucial to combine various indicators for comprehensive evaluation (backtesting strategy + strict discipline + position management) to achieve long-term profitability!
💹💹Finally, I wish everyone abundant wealth💹💹
🌀🌀Tip: Avoid over-relying on indicators while ignoring market sentiment and fundamental factors.🌀🌀
