Moving averages smooth price data to identify trend direction and dynamic support/resistance. The Simple Moving Average (SMA) weights all periods equally; the Exponential Moving Average (EMA) gives more weight to recent prices. Key MAs: 9/20 EMA (short-term), 50 SMA/EMA (intermediate), 200 SMA (long-term). Golden/death crosses and MA ribbons are widely followed signals.
SMA = average of last n closes. EMA = more weight on recent prices. Golden Cross: 50 MA crosses above 200 MA (bullish). Death Cross: 50 MA crosses below 200 MA (bearish). MA as dynamic S/R: price bounces off key MAs in trends. MA ribbon: multiple MAs creating a visual trend strength indicator.
Buy when price pulls back to a rising 20 EMA, Short when price rallies to a falling 20 EMA, Golden Cross on Daily for long-term bias, Multiple MA squeeze → expansion for breakout trades
MA crosses for trend direction, not timing. Pull-back entries: stop below the MA, target the next resistance. When price is between the 20 and 50 MA, the trend is testing — when below both, the trend may be changing.
9/20 EMA on 1M-5M (scalping), 20/50/200 on 1H-Daily (swing), 50/200 on Weekly (investing)
Moving averages are lagging indicators — they confirm trends, they don't predict them. The 200 SMA on the daily chart is the most universally watched MA and often acts as a self-fulfilling prophecy.
Pivot points are mathematically derived horizontal levels calculated from the previous period's high, low, and close that serve as potential support and resistance for the current period. The central pivot point acts as the primary directional bias level, while support and resistance levels above and below provide profit targets and stop placement zones. Pivot points are widely used by institutional and floor traders, creating self-fulfilling price reactions.
Multi-timeframe analysis (MTA) uses multiple chart timeframes to build a complete picture of market conditions. The higher timeframe provides trend direction and key levels. The intermediate timeframe confirms momentum. The lower timeframe provides precise entry timing. This 'top-down' approach dramatically improves trade quality.
Divergence occurs when price action and an indicator (RSI, MACD, CCI, OBV) move in opposite directions, signaling weakening momentum and potential reversals. Regular divergence signals reversal. Hidden divergence signals continuation. Divergence is a leading signal — it warns of momentum shifts before they appear in price.
The Relative Strength Index (RSI) and Stochastic Oscillator are bounded momentum indicators that identify overbought and oversold conditions. RSI (default: 14) ranges from 0-100; readings above 70 suggest overbought, below 30 oversold. Stochastic (default: 14, 3, 3) measures where the close falls within the recent high-low range.