Technical Analysis Indicators Cheat Sheet

Technical analysis is a method used to evaluate and predict the future price movements of securities based on historical data and market trends. Below is a cheat sheet of key technical analysis indicators that are essential for traders and investors to understand. These indicators help in making informed trading decisions by providing insights into market trends, momentum, volatility, and market strength.

1. Moving Averages (MA)

• Simple Moving Average (SMA): Calculates the average of a security's price over a specific number of periods. For example, a 50-day SMA is the average price over the last 50 days. It helps smooth out price data and identify trends.
• Exponential Moving Average (EMA): Similar to the SMA, but gives more weight to recent prices. This makes it more responsive to recent price changes. Commonly used EMAs include the 12-day and 26-day EMAs.

2. Relative Strength Index (RSI)

• Definition: Measures the speed and change of price movements on a scale of 0 to 100. It indicates overbought or oversold conditions.
• Key Levels: An RSI above 70 suggests that a security is overbought, while an RSI below 30 indicates that it is oversold.

3. Moving Average Convergence Divergence (MACD)

• Components: Consists of the MACD line, the signal line, and the histogram.
• Function: Helps identify changes in the strength, direction, momentum, and duration of a trend. A MACD crossover, where the MACD line crosses above or below the signal line, can signal potential buy or sell opportunities.

4. Bollinger Bands

• Definition: Comprise a middle band (SMA) and two outer bands that are standard deviations away from the SMA.
• Usage: The bands widen or contract based on market volatility. Prices touching the upper band may indicate an overbought condition, while touching the lower band may signal an oversold condition.

5. Stochastic Oscillator

• Components: Compares a security's closing price to its price range over a specific period.
• Key Values: Ranges from 0 to 100. Readings above 80 are considered overbought, while readings below 20 are considered oversold.

6. Fibonacci Retracement Levels

• Definition: Horizontal lines that indicate potential support and resistance levels based on the Fibonacci sequence.
• Key Levels: Commonly used retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 76.4%. These levels help in identifying potential reversal points.

7. Average True Range (ATR)

• Definition: Measures market volatility by calculating the average range between the high and low prices over a specific period.
• Usage: A higher ATR indicates increased volatility, while a lower ATR suggests decreased volatility.

8. Volume

• Definition: Represents the number of shares or contracts traded in a security or market.
• Importance: Volume is used to confirm trends. Rising volume with an uptrend or downtrend confirms the strength of the trend. Conversely, declining volume may signal a weakening trend.

9. Ichimoku Cloud

• Components: Includes five lines – Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, and Chikou Span.
• Function: Provides a comprehensive view of support and resistance levels, trend direction, and momentum. The cloud formed by Senkou Span A and B is particularly useful for visualizing potential price action and trend strength.

10. Parabolic SAR (Stop and Reverse)

• Definition: An indicator used to determine potential reversal points in the market.
• Usage: The SAR is placed below the price in an uptrend and above the price in a downtrend. When the price crosses the SAR, it may signal a trend reversal.

Summary Table

Indicator	Purpose	Key Levels
Moving Averages (MA)	Smooths price data, identifies trends	50-day SMA, 12-day EMA
RSI	Measures overbought/oversold conditions	Above 70, Below 30
MACD	Identifies changes in trend	MACD line, Signal line
Bollinger Bands	Indicates volatility and overbought/oversold conditions	Upper Band, Lower Band
Stochastic Oscillator	Measures overbought/oversold conditions	Above 80, Below 20
Fibonacci Retracement	Identifies potential support/resistance levels	23.6%, 38.2%, 50%, 61.8%
ATR	Measures market volatility	Higher ATR = Higher Volatility
Volume	Confirms trends	Rising Volume
Ichimoku Cloud	Provides comprehensive trend information	Cloud Span A & B
Parabolic SAR	Identifies potential reversal points	SAR below/above price