Some of the best trading indicators include:
- Moving Averages (MA)
- Example: Simple Moving Average (SMA)
- Usage: Identifies trend direction. If the price is above the SMA, it’s an uptrend; below, it’s a downtrend.
- Relative Strength Index (RSI)
- Usage: Measures momentum. RSI above 70 indicates overbought conditions; below 30 indicates oversold conditions.
- Moving Average Convergence Divergence (MACD)
- Usage: Shows the relationship between two EMAs. A bullish signal occurs when MACD crosses above the signal line; a bearish signal when it crosses below.
- Bollinger Bands
- Usage: Indicates volatility. Prices near the upper band may be overbought; near the lower band may be oversold.
- Stochastic Oscillator
- Usage: Measures momentum. Values above 80 are overbought; below 20 are oversold.
- Volume
- Usage: High volume often accompanies significant price moves, indicating strong interest.