Indicators: RSI and MACD

Learn about the two most important technical indicators: RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence). Learn to read buy and sell signals.

RSI (Relative Strength Index)

📊 RSI measures the strength and speed of price movements on a scale of 0-100. 🟢 RSI < 30 = Oversold (potential buy signal) 🔴 RSI > 70 = Overbought (potential sell signal) ⚪ RSI = 50 = Neutral ⚠️ In strong trends, RSI can remain in the overbought/oversold zone for a long time! 📌 Best use: Look for divergence: when price rises but RSI falls (or vice versa) = potential reversal.

MACD (Moving Average Convergence Divergence)

📊 MACD consists of three components: • MACD Line = EMA(12) - EMA(26) • Signal Line = EMA(9) of the MACD Line • Histogram = difference between MACD and Signal

🟢 Buy signal: MACD crosses the Signal Line from below 🔴 Sell signal: MACD crosses the Signal Line from above

💡 Rising histogram = momentum increases 💡 Falling histogram = momentum weakens

RSI (Overbought and Oversold Zones)

Visualization of RSI zones with example signals.

Technical Analysis