3 tools to help predict price direction - RSI

RSI is one of the most popular and most used oscillators - oscillators. RSI is used in well-known trading systems and even trusted by many professional traders and hedge funds around the world.
The typical oscillator is an indicator that will fluctuate up and down in a certain value range, usually 0-100. And the first function of oscillators is to show market excesses, including overbought and oversold. So does the RSI, which shows whether the market is in transition or not. If the RSI exceeds 70, the market is being bought too much. It should not be bought along. On the contrary, if the RSI falls below 30, it is being oversold.


RSI also shows the momentum in a market. If the RSI cuts the 30 levels from below, momentum is gradually increasing; Conversely, if cutting 70 from above, the momentum is decreasing. It can be roughly confirmed that if the momentum increases, an uptrend is gradually forming; On the contrary, decreasing momentum means that a downtrend is gradually forming.

3 tools to help predict price direction - Bollinger Bands

Bollinger Bands was invented by John Bollinger, and it is among the most popular volatility indicators. Besides the Bollinger Bands, there is also a Keltner channel, which is also an indicator that follows price movements but has no function to measure volatility.


Bollinger Bands has a very good property to measure volatility: if the market volatility is at a low level (ie accumulation or compression), the 2 BB bands will contract; If volatility is high (ie a break or break out of a squeeze, accumulation zone) then the 2 bands of BB will expand.

The middle band of BB is the MA20, which can be used to determine a trend.

When the price goes up and closes outside the band above the BB, the market is being overbought, meaning you should not chase after buying but should wait for the price to return. Conversely, when the price closes below the lower band, you should not sell anymore because the market is already oversold.

3 tools to help predict price direction - MACD

MACD is also a very well-known oscillator that is not inferior to RSI. Its functions are also good.


Trend identification: when the MACD line crosses over the signal line (positive histogram), we tend to increase. When the MACD line crosses the signal line (negative histogram), the trend is bearish. Can be used to define buy/sell points.