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.
Fibonacci retracements identify potential support and resistance levels by measuring the percentage pullback of a prior price swing using key Fibonacci ratios: 23.6%, 38.2%, 50%, 61.8%, and 78.6%. These levels often coincide with where pullbacks within trends tend to find support or resistance, making them essential for entry timing.
Supply and demand zones are price areas where significant buying or selling previously occurred, causing a strong directional move away from the zone. Unlike traditional support and resistance which uses lines, supply and demand trading identifies zones — ranges of price — where institutional orders created imbalances. When price returns to these zones, unfilled orders may trigger a reaction, providing high-probability trading opportunities.
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.