Essential Indicator Stack:
RSI (Relative Strength Index) - My primary momentum gauge. I use it for divergence signals and overbought/oversold conditions. When RSI hits 30 or below, I'm hunting for reversal signals. Above 70, I'm looking for exit opportunities or shorting setups.
Moving Averages (20, 50, 200) - These define my market structure. The 20 EMA shows short-term trend, 50 SMA is my medium-term bias, and 200 SMA is the long-term foundation. When all three are aligned and sloping in the same direction, I have maximum confidence in trend trades.
MACD - Perfect for trend changes and momentum shifts. I watch for signal line crossovers and histogram changes. The best entries often come when MACD crosses bullish while price is testing support.
Volume Profile/OBV - Volume tells the real story. Rising prices on declining volume is a major red flag. I need to see volume confirmation on breakouts and reversals.
Confirmation Setup:
1. RSI showing bullish divergence (momentum)
2. MACD crossing above signal line (trend change)
3. Price breaking above 20 EMA with volume (price action)
The Trend Strength Filter:
Only take long trades when price is above 50 SMA.
200 SMA must be sloping upward.
RSI should be above 50 for momentum confirmation.
This keeps me aligned with the dominant trend and avoids counter-trend disasters.
The magic happens when multiple indicators tell the same story. That's when I size up positions and have confidence to hold through normal volatility.