In the spirit of crypto, being that it's a conversation perennial to steemit (for obvious reasons), I've decided I'll do my first informational post on a few of the indicators I have learned about during my brief excursion into the world of charting.
I want to preface with my McCombs School of Business- Finance perspective. In the classes I've taken, we've been taught of something called EMH, or efficient market hypothesis. Basically, it ascribes conditions for markets to ascertain certain levels of efficiency (weak, semi-strong, and strong form) which are then reflected in the price of an underlying asset. While I'll spare the details, it is generally agreed upon that we have weak form efficiency, which boils down to a disparity between technical analysis and the world of academia. Essentially, weak form says that all past information is already incorporated into an assets price, and that technical analysis is simply an understandably human attempt to see patterns that aren't actually there. I digress.
I'll now list my five favorite indicators in very simple terms so as to potentially benefit anyone trying to gain a foothold in what's other wise a pretty nebulous space, as well as obviate any misconceptions.
Moving Averages (MA)- This shows the average price for a certain time frame (25 days, 50 days, etc). This indicator is GREAT for drawing support and resistance lines, and can signal large reversals, or large breakouts (to the moon, perhaps?)
Elliot Wave Theory- This is actually a theory, not an indicator, and is pretty complicated. It basically says that price swings move in impulses, with 5 waves up, and 3 waves down (mind you, all of these waves are are comprised of more than just straight lines). Playing these waves can be very effective, and once you learn the fundamentals of the theory, it's pretty neat to backtest them with old charts (well, maybe just for a college finance major).
Relative Strength Index (RSI)- This indicator is pretty commonly eulogized by your run of the mill crypto "millionaires," on youtube. It basically measures price momentum based on the average gains and losses over a certain time period. What you should know (not the math of course) is the when the RSI is around or lower than 20, a stock is usually considered oversold, and vice versa when it is around 80.
Moving Average Convergence Divergence (MACD) - The MACD uses the moving averages listed in #1, however, it shows them in comparison to each other, with one diverging of converging with the other. These movements can often signal big price movements when coupled with other indicators. Divergence of newer time period MA from older = potential breakout.
On Balance Volume (OBV) - The OBV works by subtracting the volume of a day from the previous volume if the price closes lower, or adding it if the price closes higher. This is a great tool to use to find picks that have a lot of interest.
I hope these were helpful, and can lead anyone to the path of better trades after what should be a pretty short read. If you have any questions, please feel free to ask :)