#TradingTools101

Trading Indicators Explained

1. Relative Strength Index (RSI)

- Measures momentum from 0 to 100

- Identifies overbought (>70) and oversold (<30) conditions

- Signals potential reversals when diverges from price action

2. Moving Average Convergence Divergence (MACD)

- Trend-following momentum indicator showing relationship between two moving averages

- Composed of MACD line, signal line and histogram

- Bullish signal: MACD crosses above signal line; bearish signal: MACD crosses below signal line

3. Moving Averages

- Identify trends and provide support/resistance levels

- Types: Simple Moving Average (SMA) and Exponential Moving Average (EMA)

- Common combinations: 50-day and 200-day MA for long-term trends; 9 EMA & 21 EMA for short-term trend confirmation

These indicators can be used together to confirm trends, reversals and momentum shifts, helping traders make informed decisions .