Indicators do not predict the future: they turn price into a more readable measure. Three of them cover most needs.
The RSI: the speed of the move
The RSI (Relative Strength Index) compares the size of recent rises with that of recent falls, and puts the result on a 0–100 scale. Above 70 it is called overbought; below 30, oversold.
The classic mistake
“RSI above 70, so I sell” is an excellent way to miss the strongest rallies. In a powerful trend, the RSI can stay overbought for weeks. Overbought signals strength, not necessarily a reversal.
The MACD: acceleration
The MACD measures the gap between two exponential moving averages. It shows whether the trend is accelerating or running out of steam. The MACD crossing its signal line is the most commonly used trigger.
The ADX: strength, not direction
The ADX answers a single question: is there a trend, and is it strong? Above 25 the trend is pronounced (up OR down). Below 20 the market has no direction — and that is precisely where most trend indicators fail.
Using it intelligently
Use the ADX as a filter: if it is weak, ignore your trend signals (moving averages, MACD) and wait. Combining a strength indicator with a direction indicator avoids most false signals.
Divergences
The most interesting signal from the RSI and MACD is divergence. Price makes a new high, but the indicator does not: momentum is fading while the price still rises. It is a warning, not an order.
In Earnnest
RSI, MACD and ADX feed the technical score in the Technical tab, aggregated with sentiment into the composite score [0–100].
À retenir
- ✓RSI = momentum (0–100); MACD = acceleration; ADX = strength of the trend.
- ✓Overbought does not mean “sell”: in a strong trend it can last.
- ✓Filter your signals with the ADX; watch for divergences as warnings.