🌀🌀 From today's market performance, indicators have already provided hints. Although indicators have lagging characteristics, entering at the right moment still yields profits. I believe friends who entered based on indicators are already reaping rewards. True speculators do not enter blindly but wait for the right moment, accurately cutting in when the market opens up.🌀🌀
🌈🌈 Many students still do not understand the meaning of indicators. Today, I will summarize. I hope everyone can understand the data without having to buy a course, make precise predictions based on indicators, and sharp speculators are always more accurate than grid speculation.🌈🌈
🔵🔵 Core indicator explanation (Chinese-English comparison)
1️⃣ Basic indicators
- Volume:
Reflects the market's buying and selling activity. Increased volume with rising prices (price increase + volume increase) is more credible, while decreased volume with falling prices (price falls but volume is low) may indicate a false breakout.
- MA (Simple Moving Average):
Directly calculates the average price over a certain period (e.g., MA20 = average closing price of the last 20 K lines).
Characteristics: equal weight to historical data, smooth trend but lagging.
- EMA (Exponential Moving Average):
Assigns higher weight to recent prices, reacts faster to price changes than MA.
Applicable scenarios: short-term trading (e.g., EMA12/EMA26 combination).
- Difference between MA and EMA:
EMA is more sensitive, suitable for capturing early trend signals; MA is more stable, suitable for confirming trends.
2️⃣ Trend indicators
- BOLL (Bollinger Bands):
Composed of three lines: middle track (MA20), upper track (MA20+2 standard deviations), lower track (MA20-2 standard deviations).
Usage:
- Price touching the upper band may be overbought, touching the lower band may be oversold;
- Narrowing of Bollinger Bands suggests an impending reversal (increased volatility).
- SAR (Parabolic SAR):
Displayed as dots below or above K lines, used to judge trend reversals.
Rules:
- Price above the SAR point → upward trend, go long;
- Price below the SAR point → downward trend, go short.
- MACD (Moving Average Convergence Divergence):
Composed of fast line (DIF), slow line (DEA), and histogram.
Usage:
- Golden cross (DIF crosses above DEA) → long signal;
- Dead cross (DIF crosses below DEA) → short signal;
- Histogram highs and lows reflect momentum strength.
3️⃣ Volatility indicators
- RSI (Relative Strength Index):
Measures the speed of price rise and fall, range 0-100.
Usage:
- RSI >70→overbought (take profit or go short), may retrace;
- RSI <30→oversold (stop falling or go long), may rebound;
- Divergence: price makes new highs but RSI does not → trend reversal warning.
🔅🔅 Overbought and oversold are terms in technical analysis, and their relationship with operational direction is as follows:
- Overbought (RSI >70): price has risen too quickly in the short term, may retrace → be cautious about going long, consider taking profits or going short.
- Oversold (RSI <30): price has fallen too sharply in the short term, may rebound → be cautious about going short, consider stopping the fall or going long.
✴️ Simple summary:
- Overbought ≠ go long, rather it is a reminder 'don't chase the rise';
- Oversold ≠ go short, rather it is a reminder 'don't panic sell'.
It needs to be judged in conjunction with the trend (for example, overbought in an upward trend may continue, only a short-term pullback).
- KDJ (Stochastic Indicator):
Composed of K line, D line, and J line, reflecting the price position within the period.
Usage:
- K/D >80→overbought, <20→oversold;
- K line crosses above D line → Golden cross (go long), crosses below → Dead cross (go short).
- WR (Williams %R):
Similar to RSI, but the calculation method is different, range 0-100.
Usage:
- WR >80→oversold, <20→overbought;
- Need to use in conjunction with trends (overbought in a downtrend may continue to fall).
- Stoch RSI (Stochastic RSI):
Conduct another random calculation on RSI, making it more sensitive and capturing reversal signals early.
Difference from RSI:
- Stoch RSI fluctuates more, suitable for short-term;
- RSI is more stable, suitable for medium to long term.
🔵🔵 How to judge short-term direction in conjunction with indicators?
🔅🔅 Core Principle:
Multiple indicator resonance + trend priority + risk control
1️⃣ First look at the long cycle trend (e.g., 4-hour/daily):
- The long cycle is upward, and a short-term pullback may be an opportunity to go long;
- The long cycle is downward, and a short-term rebound may be an opportunity to short.
2️⃣ Multiple indicators cross-validation (taking long as an example):
- Trend confirmation: price above MA/EMA, and EMA golden cross;
- Momentum validation: MACD histogram amplifies, RSI rises from the oversold zone (>50);
- Volatility assistance: price rebounds after retracing to the BOLL lower band, volume increases;
- Reversal signal: Stoch RSI golden crosses from the oversold zone.
3️⃣ Practical case (going long on a 15-minute cycle):
- Step 1: 4-hour chart EMA bullish arrangement (EMA12>EMA26>EMA50);
- Step 2: 15-minute chart price retracement to BOLL middle track (MA20) not broken, while RSI rises from 40 to 55;
- Step 3: MACD forms a golden cross above the zero axis, and volume suddenly increases;
- Step 4: SAR point flips below the K line, confirming trend reversal;
- Entry: price breaks above the previous K line high, set stop-loss at the previous low.
🔵🔵 Notes
1️⃣ Avoid overfitting:
The more indicators, the easier it is to have contradictions. It is recommended to choose 2-3 complementary indicators (e.g., MACD+RSI+BOLL).
2️⃣ Distinguish market states:
- In a trending market: MA/EMA+MACD is more effective;
- In a volatile market: RSI/KDJ+BOLL is more effective.
3️⃣ Contract trading risk control:
- Leverage should not be too high (recommended ≤10x);
- Stop-loss must be set (e.g., if breaking key MA or previous low);
- Profits can be taken in batches (e.g., using trailing stop-loss to protect profits).
🔅🔅 Summary:
- Recommended short-term trading indicator combination:
EMA (12/26) + MACD + RSI + Volume
1. EMA golden cross + MACD histogram amplifies → trend confirmation;
2. RSI exiting the overbought/oversold zone → momentum validation;
3. Volume increases → signal credibility improves.
🔅🔅 Ultimate advice:
All indicators are statistical results of historical data, and a single indicator cannot predict the future 100% accurately. It is essential to evaluate comprehensively using various indicators (backtesting strategy + strict discipline + position management) to achieve long-term profitability!
💹💹 Finally, wish everyone a prosperous financial future💹💹
🌀🌀 Reminder: Avoid over-reliance on indicators while neglecting market sentiment and fundamental factors.🌀🌀
