Technical analysis is not just lines and colors on a screen, but the market's language that translates price movements into smart trading decisions. As an experienced trader, I will share the essence of my experience with technical indicators, not repetitive theoretical talk, but practical secrets from the reality of charts and daily transactions.
1. Moving averages: The eyes of the market
- Simple Moving Average (SMA 50, 200):
If the price is above 200, the market is bullish in the long term. If the price breaks below 50 from above, it's a bearish warning.
- Personal tactic: I use the crossover of 50 with 200 (Death Cross / Golden Cross) to confirm major trends.
- Exponential Moving Average (EMA 9, 21):
I prefer it for day trading. If the price is above EMA 9, momentum is bullish. If the 9 crosses the 21 upwards, it's a strong buy signal.
2. RSI: The market madness meter
- Don't settle for 70 and 30!
In strong trends, RSI can stay at 80 or 20 for long periods.
- Old trick: If RSI is above 50, the market is bullish, and if below, bearish. Don't go against the trend!
- Divergence is the strongest:
If the price makes a higher peak and RSI makes a lower peak, prepare for a reversal. This signal has saved me many times.
3. MACD: The smart trader's weapon
- The intersection is fundamental:
When the fast line (blue) crosses the slow line (orange) upwards, it's a buy signal.
- A secret not known to everyone: If MACD is above zero, the trend is bullish, and vice versa.
- Divergence is also important here:
If the price is rising and the indicator is falling, it's a warning!
4. Bollinger Bands: The volatility cage
- Buy at the lower band touch, sell at the upper:
But be careful! In strong trends, the price may touch the upper band and continue rising.
- Practical trick: If the bands narrow, expect a big price explosion soon.
5. Ichimoku: The magic cloud
- If the price is above the cloud, it's a bullish trend:
- Tenkan-Sen (red line) above Kijun-Sen (blue line) → Buy signal.
- Note from reality: Ichimoku works great on larger timeframes (4 hours and above).
6. Volume: The lifeblood of the market
- Don't ignore it!
If the price is rising with high trading volume, it's a strong signal.
- Password: If the price breaks resistance with a sudden increase in volume, the breakout is real.
The conclusion: How to analyze like professionals?
1. Start with the overall trend (use SMA 200 or Ichimoku).
2. Identify entry points (using RSI or MACD).
3. Ensure momentum (volume + moving average crossover).
4. Don't go against the market; the trend is your friend until it reverses!
