Technical indicators help traders read price charts. Learn what they are and which indicators are the most widely used.
What Is a Technical Indicator?
A technical indicator is a mathematical calculation based on price and volume, plotted on a chart to help traders spot trends, momentum and potential reversals.
Moving Averages
Moving averages smooth out price data to reveal the underlying trend. The 50-day and 200-day averages are especially popular.
RSI (Relative Strength Index)
RSI measures momentum on a scale of 0 to 100. Readings above 70 suggest an asset may be overbought, while readings below 30 suggest it may be oversold.
MACD
The Moving Average Convergence Divergence indicator highlights changes in momentum and is often used to confirm trend direction.
Bollinger Bands
These bands expand and contract with volatility, helping traders judge whether price is relatively high or low.
Using Indicators Wisely
No single indicator is perfect. Experienced traders combine a few and always confirm signals with sound risk management.