Technical Analysis Indicators
What Are the Technical Analysis Indicators?
Technical Analysis Indicators are essential tools that traders use to evaluate historical price data and market trends. By applying mathematical formulas to price, volume, or other market parameters, these indicators help identify potential buy or sell signals, trends, momentum, volatility, and market strength, enabling informed trading decisions.
ADX (Average Directional Index)
Measures the strength of a trend, regardless of its direction. The ADX quantifies trend strength, helping traders determine whether the market is trending or ranging.
ADX on Investopedia
ADX Example at TradingView
MACD (Moving Average Convergence Divergence)
Identifies changes in the strength, direction, momentum, and duration of a trend. Developed by Gerald Appel in the late 1970s, the MACD is widely used to spot potential buy and sell signals through the relationship between two moving averages.
MACD on Investopedia
MACD Example at TradingView
OBV (On-Balance Volume)
Measures buying and selling pressure based on volume changes. Created by Joseph Granville in 1963, OBV helps predict price movements by analyzing the relationship between volume and price, aiding in identifying potential reversals and trend confirmations.
OBV on Investopedia
OBV Example at TradingView
RSI (Relative Strength Index)
Measures the speed and change of price movements to identify overbought or oversold conditions. Developed by J. Welles Wilder in 1978, RSI helps traders determine potential reversal points or confirm existing trends by evaluating the momentum of price changes.
RSI on Investopedia
RSI Example at TradingView
Williams %R (Williams Percent Range)
Identifies overbought and oversold levels to assess trend strength and potential reversal points. Developed by Larry Williams, this momentum oscillator is similar to the Stochastic Oscillator but is plotted on an inverted scale ranging from -100 to 0.
Williams %R on Investopedia
Williams %R Example at TradingView
Indicator settings
Common indicator settings
Bar duration
The time frame or period each individual bar represents on a price chart, displaying open, high, low, and close (OHLC) prices.
Options: Minutes, hours, days, weeks, etc.
Short Durations Impact: Provide granular data for capturing short-term price movements but may be noisy and less reliable for long-term trends.
Long Durations Impact: Offer a clearer view of broader trends by filtering out short-term fluctuations, though they may be too slow for active day traders.
Synchronize bars
Sets a common bar duration for all indicators that support this option, ensuring consistency across your analysis tools.
Indicator bar count
The number of bars used to calculate the indicator. Applies to most indicators to determine the period over which calculations are performed.
ADX settings
DI Bar Count: Determines the number of bars used to calculate the Directional Indicators (DI), which are integral to computing the ADX. Modify this setting to fine-tune the sensitivity of the ADX to trend strength.
MACD settings
The standard MACD setup uses two EMAs:
- The Short (Fast) Exponential Moving Average (EMA). Typically set to 12 periods (bars).
- The Long (Slow) Exponential Moving Average (EMA). Typically set to 26 periods (bars).
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