Technical Indicators

A technical indicator is a statistical algorithm or pattern-based indication based on a security’s or contract’s historical price, volume, and/or open interest.


A technical indicator is a statistical algorithm or pattern-based indication based on a security’s or contract’s historical price, volume, and/or open interest.

What Are Technical Indicators?

A technical indicator is a tool used to analyze financial data, such as price, volume or open interest. Technical indicators are typically used in conjunction with technical analysis, a method of evaluating securities by analyzing market activity-generated statistics, such as past prices and volume.

How Do Technical Indicators Work?

Technical indicators are used to analyze the past behavior of a security or market to try to identify patterns that can be used to make predictions about future behavior. Some of the most commonly used technical indicators include:

  1. Moving Average (MA): A moving average is a technical indicator that averages out the past X number of periods (days, weeks, months, etc.) to create a smoother line that can be used to identify trends. Moving averages are often used with other technical indicators to confirm signals and provide additional information about potential trades.
  2. Relative Strength Index (RSI): The RSI is commonly used to identify overbought or oversold conditions and can also be used to identify potential entry and exit points.
  3. Bollinger Bands: Bollinger bands are a technical indicator that uses a moving average and standard deviation to create upper and lower bands that can be used to identify trends and potential entry and exit points. When the price of a security or market moves outside of the upper or lower Bollinger band, it can be an indication of a potential trend change.
  4. Moving Average Convergence Divergence (MACD): The moving average convergence divergence (MACD) is a technical indicator that uses the difference between two moving averages to identify potential trends and generate trading signals. The MACD is commonly used with other technical indicators to confirm signals and provide additional information about potential trades.
  5. Stochastic Oscillator: The stochastic oscillator is a technical indicator that uses the closing price of a security or market to identify overbought or oversold conditions, and to generate potential entry and exit points. The stochastic oscillator is commonly used with other technical indicators to confirm signals and provide additional information about potential trades.

Technical Indicators in Crypto

In crypto, technical indicators can be used to identify trends and potential entry & exit points, and predict future price movements. Some popular technical indicators used in the crypto market include the MA, the RSI and the Bollinger Bands. Other popular technical indicators are On-Balance-Volume (OBV), the Accumulation/Distribution Indicator, the Average Directional Index (ADV), and the Aroon Indicator. 

Cryptocurrency traders often use technical indicators and other tools and techniques, such as fundamental analysis and sentiment analysis, to make informed trading decisions.