Trading Indicators — Learning Dashboard

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Indicator Overview

Technical indicators are mathematical calculations based on price, volume, or open interest.
They help traders understand market context — trend, momentum, volatility, and volume.

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Trend Indicators

Trend indicators smooth price data to identify direction. They work best in trending markets, not sideways ones.

Moving Averages (SMA / EMA)

SMA20

EMA12

SMA = simple average of last N closes. EMA gives more weight to recent prices.

BULLISH Price crosses above MA — potential uptrend
BEARISH Price crosses below MA — potential downtrend
GOLDEN CROSS 50-day crosses above 200-day = strong bull signal

SMA(n) = (P₁ + P₂ + … + Pₙ) / n
EMA = Price × k + EMA_prev × (1 − k)
where k = 2 / (n + 1)

MACD

MACD = 12-day EMA − 26-day EMA. Signal line = 9-day EMA of MACD.

BULLISH MACD crosses above Signal line
BEARISH MACD crosses below Signal line
DIVERGENCE Price makes new high but MACD doesn't → weakness

MACD Line = EMA(12) − EMA(26)
Signal = EMA(9) of MACD Line
Histogram = MACD − Signal

Supertrend

Supertrend uses ATR to plot a dynamic support/resistance line. Color changes signal trend reversal.

GREEN LINE Price above line → uptrend, trail stops below
RED LINE Price below line → downtrend, trail stops above

Upper Band = (High+Low)/2 + Multiplier × ATR(n)
Lower Band = (High+Low)/2 − Multiplier × ATR(n)

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Momentum Indicators

Momentum indicators measure the speed and strength of price movement. Key for spotting overbought/oversold conditions.

RSI — Relative Strength Index

Period14

RSI oscillates 0–100. Measures recent gains vs. losses over N periods.

OVERBOUGHT RSI > 70 — consider reducing longs
OVERSOLD RSI < 30 — potential buying opportunity
DIVERGENCE Price high + RSI lower high = weakness ahead

RSI = 100 − 100/(1 + RS)
RS = Avg Gain(n) / Avg Loss(n)

Stochastic Oscillator

%K = position of close within High-Low range. %D = 3-period SMA of %K.

OVERBOUGHT Both lines above 80
OVERSOLD Both lines below 20
CROSSOVER %K crosses %D = signal

%K = (Close − Low_n)/(High_n − Low_n) × 100
%D = SMA(3) of %K

CCI — Commodity Channel Index

CCI measures deviation from average price. Originally for commodities, now widely used.
OVERBOUGHT CCI > +100 OVERSOLD CCI < −100 ZERO CROSS Trend entry signal

CCI = (Typical Price − SMA(TP)) / (0.015 × Mean Deviation)
Typical Price = (High + Low + Close) / 3

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Volatility Indicators

Volatility indicators measure how much price fluctuates. High volatility = big moves; low volatility = consolidation.

Bollinger Bands

Period20

σ2

Bollinger Bands = SMA ± (K × Standard Deviation). Bands widen in volatility, contract in consolidation.

UPPER TOUCH Price at upper band → often overbought
LOWER TOUCH Price at lower band → often oversold
SQUEEZE Very narrow bands → big move coming!

Middle = SMA(n)
Upper = SMA + K × σ(n)
Lower = SMA − K × σ(n)

ATR — Average True Range

ATR measures market volatility by averaging True Range over N periods.

HIGH ATR Volatile conditions — widen stop loss
LOW ATR Calm market — tighter stops possible
USE CASE Position sizing, stop placement (1.5–2× ATR)

TR = max(High−Low, |High−Close_prev|, |Low−Close_prev|)
ATR = EMA(14) of TR

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Volume Indicators

Volume confirms price moves. High volume breakout = conviction. Low volume move = suspect.

OBV — On Balance Volume

OBV adds volume on up days, subtracts on down days. Cumulative. Divergence from price = warning.

RISING OBV Accumulation — buyers in control
FALLING OBV Distribution — sellers dominating
DIVERGENCE Price up, OBV down = smart money exiting

OBV = OBV_prev + Volume (if Close > Close_prev)
OBV = OBV_prev − Volume (if Close < Close_prev)

VWAP — Volume Weighted Avg Price

VWAP = cumulative (price × volume) ÷ cumulative volume. Resets daily. Institutional benchmark.

ABOVE VWAP Bullish intraday — institutions buying
BELOW VWAP Bearish intraday — selling pressure
INTRADAY Best used on intraday charts (5min–1hr)

VWAP = Σ(Typical Price × Volume) / Σ(Volume)
TP = (High + Low + Close) / 3

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Candlestick Patterns

Candlestick patterns capture the psychology of buyers and sellers within a candle or sequence of candles.

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Indicator Comparison

Side-by-side comparison of all major indicators — strengths, weaknesses, and when to use each.

Indicator	Type	Best For	Weakness	Timeframe

Leading vs Lagging

Lagging indicators (MA, MACD) confirm a trend already in progress. Lower risk, miss early entry.
Leading indicators (RSI, Stoch) predict future moves. More signals, more false signals.

Combining Indicators

Use one from each category to avoid redundancy:

✅ Trend + Momentum: MA + RSI
✅ Trend + Volume: MACD + OBV
✅ Volatility + Trend: BB + Supertrend

❌ Avoid: MACD + Stoch (both momentum — same signal twice)
❌ Avoid: SMA + EMA alone (same type, redundant)

PRO TIP Confluence — when 2–3 indicators agree = higher probability setup.