Technical Analysis

Chart patterns, indicators, and statistical signals used for entry and exit timing on shorter time horizons.

Key Points

• The 50/200 day moving average crossover (“golden cross” / “death cross”) is a long-horizon trend filter, not a timing signal — it lags too much for entries
• RSI(14) divergence (price makes new high, RSI does not) is a more reliable reversal signal than absolute RSI levels; above 70 is not a short signal on its own
• Bollinger Band squeezes (bandwidth at 6-month low) reliably precede large moves; the direction of the breakout matters more than the squeeze itself
• Volume confirms price moves: a breakout on declining volume is more likely to fail than one on rising volume
• Support and resistance are not lines, they are zones — the more times a zone is tested, the stronger it becomes until it isn’t
• Fibonacci retracements (38.2%, 50%, 61.8%) are self-fulfilling at the crowd level but have no edge after the cost of trading

Strategies

Mean Reversion with Bollinger Bands

Enter short when price closes above the upper band, exit at the 20-period MA. Filter by ADX < 25 to ensure ranging market conditions.

Trend Following with MACD

Use MACD(12,26,9) crossover on the daily chart as a position-tilt signal: long when histogram positive, short when negative. Combine with a longer-term trend filter (e.g. 200-day MA) to avoid counter-trend whipsaws.

RSI Divergence Reversal

Look for price/RSI divergence at swing highs/lows. Confirm with a candlestick reversal pattern (engulfing, hammer) before entry.

Metrics & Formulas

• RSI: 100 − (100 / (1 + RS)) where RS = avg gain / avg loss over N periods
• MACD line: EMA(12) − EMA(26)
• Signal line: EMA(9) of MACD line
• Bollinger Bands: SMA(20) ± 2 × std(20)

Tools & Resources

• TradingView — Charting and social strategy ideas
• TA-Lib — All standard indicators in Python
• pandas-ta — DataFrame-native indicator library
• Optuma / MetaStock — Professional-grade technical analysis platforms