Example Analysis
Learn how to read technical indicators with sample data
Understanding Moving Averages
Moving averages smooth out price data to identify trends. When a short-term moving average (e.g., 5-day) crosses above a long-term moving average (e.g., 25-day), it's called a "golden cross" and may indicate a bullish trend. The opposite is called a "death cross" and may indicate a bearish trend.
RSI (Relative Strength Index)
RSI ranges from 0 to 100. Values above 70 typically indicate overbought conditions, while values below 30 indicate oversold conditions. However, in strong trending markets, RSI can remain above 70 or below 30 for extended periods.
MACD (Moving Average Convergence Divergence)
MACD shows the relationship between two moving averages. When the MACD line crosses above the signal line, it may indicate a buy signal. When it crosses below, it may indicate a sell signal. The histogram above zero suggests bullish momentum.
Key Analysis Points
- Don't rely on a single indicator; combine multiple indicators for better analysis
- Identify the trend direction (uptrend, downtrend, or sideways)
- Consider volume - higher volume confirms price movements
- Past patterns don't guarantee future results
- Consider market conditions and economic factors