Trading Indicator Definitions

The Average Directional Index (ADX) measures the strength of a trend without indicating its direction. Values above 25 typically suggest a strong trend, while values below 20 indicate a weak or non-trending market.

The Average True Range (ATR) measures market volatility by calculating the average range between high and low prices over a specific period. Higher ATR values indicate greater volatility, while lower values suggest a stable market.

Bollinger Bands are volatility indicators plotted above and below a moving average. They widen during high volatility and contract during low volatility. Traders use them to identify overbought or oversold conditions and potential price reversals.

Candlestick Patterns are chart formations used to predict market direction based on the open, high, low, and close prices within a specific timeframe. Popular patterns include Doji, Hammer, Engulfing, and Shooting Star.

Fibonacci Retracement is a technical analysis tool that identifies potential support and resistance levels based on the Fibonacci sequence. Common retracement levels include 38.2%, 50%, and 61.8%, helping traders identify potential reversal points.

The Ichimoku Cloud is a comprehensive indicator used to gauge momentum, trend direction, and support/resistance levels. It consists of five lines, with the cloud itself providing insight into future support and resistance areas.

The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages. Traders use MACD crossovers, divergence, and histogram analysis to spot potential buy and sell signals.

Momentum Oscillators measure the speed and magnitude of price movements, helping traders identify overbought or oversold conditions. Common examples include RSI, Stochastic Oscillator, and MACD.

A Moving Average Crossover occurs when a shorter-term moving average crosses above or below a longer-term moving average. A bullish crossover signals a potential upward trend, while a bearish crossover suggests a downward trend.

Moving Averages smooth out price data to identify trends over time. The Simple Moving Average (SMA) calculates the average price over a set period, while the Exponential Moving Average (EMA) gives more weight to recent prices, making it more responsive to changes.

On-Balance Volume (OBV) is a volume-based indicator that measures cumulative buying and selling pressure. It helps traders identify trends and confirm price movements by comparing volume flow to price changes.

The Parabolic SAR (Stop and Reverse) is a trend-following indicator used to identify potential reversal points. It appears as a series of dots above or below price bars, signaling whether traders should be long or short in the market.

Pivot Points are calculated price levels used to determine potential support and resistance areas. They help traders identify entry and exit points and are especially popular among day traders and swing traders.

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold conditions.

The Stochastic Oscillator compares a security’s closing price to its price range over a specified period. It ranges from 0 to 100, with readings above 80 suggesting overbought conditions and below 20 indicating oversold conditions.

Volume Analysis examines the trading volume of a security to confirm price trends and detect potential reversals. High volume during price increases suggests strength, while low volume during price moves may indicate weakness or potential reversals.