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6 articles
Clear filtersWhat Technical Analysis Is, and What It Is Not
Technical analysis studies price and trading volume to describe the balance of supply and demand. It describes conditions; it does not forecast outcomes.
Moving Averages: Simple and Exponential
A moving average is the average of recent closes, redrawn each bar. A simple one weights every close equally; an exponential one weights recent closes more, so it turns sooner. Both turn a jagged series into a slope.
The Golden Cross and the Death Cross
A golden cross is the 50-day moving average crossing above the 200-day; a death cross is the reverse. Both are widely reported, heavily lagging, and describe a trend that has already turned.
RSI: The Relative Strength Index
RSI (Relative Strength Index) is a 0 to 100 oscillator comparing recent gains with recent losses. Above 70 is called overbought and below 30 oversold, and those thresholds are conventions rather than rules.
Volume and On-Balance Volume
Trading volume is the number of shares that changed hands. It measures participation, and it is the one chart input that is not a transformation of price, which is what makes it worth reading on its own.
Relative Volume (RVOL)
Relative volume (RVOL) is a stock's volume divided by its own average volume, so 3 means three times the usual participation. It measures how unusual activity is, and says nothing about direction.