Chapters in Technical Analysis & Trading Tools
Chapter 4 of 10 · 6 min read
RSI, MACD and momentum indicators
Measure the speed of price moves: oversold, overbought, and trend momentum shifts.
RSI
The Relative Strength Index (0 to 100) compares recent gains with losses. Above 70 is conventionally overbought, below 30 oversold. In strong trends RSI can stay extreme for long, so use it for context, not automatic reversals.
MACD
MACD is the gap between a fast and slow EMA, with a signal line and histogram. A histogram crossing above zero shows rising bullish momentum; below zero, bearish.
Other momentum tools
Trade Lab covers a wider set, each with a different job:
- Stochastic, CCI, MFI: oscillators for overbought and oversold.
- ADX: trend strength (not direction).
- ATR: typical range, used for stops and sizing.
- Supertrend, Parabolic SAR, Aroon: trend-following signals.
- Ichimoku, VWAP, OBV: trend, average price and volume-flow views.
Key takeaways
- RSI/MACD describe momentum, not value.
- Combine one trend tool and one momentum tool; avoid stacking similar ones.
- Always test an indicator rule on history before trusting it.
Put it into practice
Open the live page on Market Intelligence and see this concept on real data.
Keep learning
- Backtesting: testing ideas on history · Technical Analysis & Trading Tools
Education only, not investment advice. Updated 2026-10-09.