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Understanding technical indicators

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Technical indicators distill price and volume data into a single line or histogram. They do not predict the future — they describe the recent past in a way that helps you form a bias.

TREND INDICATORS: Moving averages (SMA, EMA) smooth out noise to show the underlying direction. The 200-day SMA is the most widely watched — institutions use it as a long-term filter.

MOMENTUM INDICATORS: RSI measures the speed of price moves on a scale of 0–100. Above 70 suggests overbought conditions; below 30, oversold. Neither is a trade signal on its own.

VOLUME INDICATORS: OBV and the Volume Profile show where most activity happened. A breakout with high volume is more convincing than one on thin participation.

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