Technical Analysis Basics: RSI, MACD, and Moving Averages

Technical analysis is the study of price action and volume to forecast future price movements. It's not magic — it's the collective behavior of market participants encoded in price data.

RSI (Relative Strength Index) RSI measures momentum on a scale of 0–100. Above 70 = overbought (potential reversal). Below 30 = oversold (potential bounce). The most common mistake: using RSI levels in isolation. RSI can stay overbought for extended periods in strong trends. Use divergence (price makes new high, RSI doesn't) as a stronger signal.

MACD (Moving Average Convergence Divergence) MACD consists of two EMAs (typically 12 and 26 periods) and a signal line (9 periods). Bullish signal: MACD line crosses above signal line. Bearish signal: MACD crosses below. The histogram shows the distance between MACD and signal — widening = momentum, narrowing = exhaustion.

Moving Averages Simple Moving Average (SMA): equal weight to all periods. Exponential Moving Average (EMA): more weight to recent prices. Common configurations: 9/21 EMA (short-term momentum), 50/200 SMA (trend). Golden Cross (50-day crosses above 200-day) = bullish. Death Cross = bearish.

Volume: The Confirmation Tool Price moves on high volume = conviction. Price moves on low volume = suspect. Volume precedes price — look for volume spikes before breakouts.

Putting It Together No single indicator works alone. InvicTrade AI personas combine multiple indicators with a scoring system — a trade only fires when the combined score meets a persona-specific threshold.