1. RSI (Relative Strength Index)
The RSI is a technical indicator that measures momentum and compares recent price movements to historical trends. When the RSI is above 70, the market is considered overbought. A reading below 30 indicates that the market is oversold.
2. MACD (Moving Average Convergence Divergence)
MACD is a trend-following oscillator that shows the relationship between two moving averages. It's designed to identify potential trend changes. The signal line represents the average difference between the faster and slower moving averages; the histogram line represents the distribution of the differences. When the signal line crosses under the histogram line, the MACD becomes negative, indicating a possible trend change.
3. Stochastic Oscillator
The stochastic oscillator is similar to the RSI, except that it uses different indicators to measure momentum. The stochastic oscillator tends to move together with the price action rather than leading or lagging behind.
4. Bollinger Bands
Bollinger bands are a popular tool among traders and investors. They show the current range of prices based on standard deviation. Traders use them to determine entry points and exit points.
5. Ichimoku Cloud
Ichimoku cloud is a Japanese term that refers to a set of four lines on a chart that represent various levels of support and resistance. The outermost lines are called Kijun Sen and Hata Nikkei. These lines indicate where the price is likely to find support and resistance. The middle lines are called Tenkan Sen and Kijun Bu. These lines indicate the current level of the price. Finally, the innermost lines are called Shikakai and Marubozu. These lines indicate the direction of future movement.
6. Fibonacci Retracement Levels
Fibonacci retracements are a series of price levels that follow a mathematical pattern. Each number after the first ratio is the sum of the previous two numbers. In other words, each ratio is the sum of its own prior ratio plus the ratio before that. For example, the second ratio would be equal to the sum of the first ratio plus the ratio before it.
7. Moving Averages
A moving average is a simple way to smooth out price data. By averaging the closing prices over a specific period of time, we get a clearer picture of what the market is doing. There are many types of moving averages, including exponential, linear, and weighted averages.