Key Technical Indicators for Smart Investing 

To interpret stock charts effectively, investors use technical indicators to analyze price movements and identify buy and sell signals. 

1. Moving Averages (MA & EMA) 

✔ Simple Moving Average (SMA) – Calculates the average stock price over a set period (e.g., 50-day, 200-day). 
✔ Exponential Moving Average (EMA) – Places more weight on recent prices, making it better for spotting trends. 

???? How It Helps: 

2. Relative Strength Index (RSI) 

✔ Measures stock momentum on a scale from 0 to 100. 
✔ Above 70 – Overbought (possible price drop). 
✔ Below 30 – Oversold (potential buying opportunity). 

???? Example Use: If RSI is above 70, investors might wait for a price correction before buying. 

3. Bollinger Bands 

✔ Uses a moving average with upper and lower bands to measure volatility. 
✔ When prices touch the upper band, the stock is considered overbought. 
✔ When prices touch the lower band, the stock is oversold. 

???? Why It Matters: Helps investors identify breakouts and market corrections. 

4. Volume Analysis 

✔ Measures the number of shares traded within a time period. 
✔ High volume + rising price = strong uptrend. 
✔ High volume + falling price = strong downtrend. 

???? Key Takeaway: Volume spikes often precede major price movements. 

How Understanding Stock Charts Can Improve Your Investing Strategy 

✔ Spot Market Trends Early – Recognizing trends helps investors capitalize on bullish markets and avoid bearish downturns. 
✔ Make Data-Driven Decisions – Stock charts provide objective insights, reducing emotional investing. 
✔ Identify Risk and Reward Ratios – Understanding support and resistance levels helps determine the best entry and exit points. 
✔ Enhance Portfolio Diversification – By analyzing different stocks and sectors, investors can build a balanced, low-risk portfolio.