Technical Indicators for Stocks

Technical indicators help identify trends, momentum, and potential reversals.

Trend Indicators

Moving Averages



• 50-day SMA: Medium-term trend
• 200-day SMA: Long-term trend
• Price above both = bullish
• Golden Cross: 50 crosses above 200
• Death Cross: 50 crosses below 200

MACD

• Moving Average Convergence Divergence
• Two lines: MACD line and Signal line
• Histogram shows momentum strength
• Crossovers signal trend changes
• Divergence warns of reversals

Momentum Indicators

RSI (Relative Strength Index)



• Range: 0-100
• Above 70: Overbought
• Below 30: Oversold
• Divergence is key signal
• Best in ranging markets

Stochastic Oscillator

• Measures close relative to range
• Above 80: Overbought
• Below 20: Oversold
• Fast and slow variants
• Good for timing entries

Volume Indicators

On-Balance Volume (OBV)

• Cumulative volume measure
• Rising OBV confirms uptrend
• Divergence warns of weakness
• Simple but effective

Volume Profile

• Shows trading volume at each price
• High-volume nodes = support/resistance
• Point of Control (POC)
• Value Area (68% of volume)

Volatility Indicators

Bollinger Bands

• 20-period SMA with 2 standard deviations
• Squeeze = low volatility, breakout coming
• Touch outer band = potential reversal
• Walk the band = strong trend

ATR (Average True Range)

• Measures volatility in points
• Use for stop loss placement
• Higher ATR = wider stops needed
• Position size adjustment

Best Practices

1. Use 2-3 indicators maximum
2. Combine trend + momentum
3. Confirm with volume
4. No indicator is perfect
5. Price action is the ultimate indicator