Technical Indicators Explained: RSI, MACD and Moving Averages

Publisher and editorial transparency

Published by TradeHQ. Site creator: Anuga Weerasinghe. A limited source check dated 2026-10-18 is documented below, with its precise scope. This is not a full independent editorial or professional review; no independent professional review is claimed.

Summary

RSI, MACD and moving averages describe selected price observations. Learn their calculations, conventional interpretations and limits, then compare hypothetical examples without treating a signal as a trade recommendation.

Source-check scope

Source check: 2026-10-18. RSI, MACD and moving-average definitions compared with the linked Fidelity guides; no predictive-performance or professional review claimed.

Moving Averages: The Foundation of Trend Analysis

Moving averages (MAs) smooth out price data to reveal the underlying trend. The two most common types are the Simple Moving Average (SMA), which gives equal weight to all prices in the period, and the Exponential Moving Average (EMA), which gives more weight to recent prices and reacts faster to changes.

A 50-period average crossing above a 200-period average is called a golden cross; the reverse is a death cross. The period might mean days or another chart interval. These lagging observations describe the selected series and do not establish that a rally or decline will follow.

Shorter averages such as a 9-period or 21-period EMA react differently from longer averages. A price above an average describes its position relative to that calculation, not a guaranteed trend. TradeHQ chart controls include moving-average and volume overlays; indicator examples should match the actual chart features.

RSI: Measuring Momentum and Overbought/Oversold Conditions

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of price changes on a scale of 0 to 100. Developed by J. Welles Wilder, RSI compares the average gains and losses over a 14-period window to determine whether an asset is overbought (above 70) or oversold (below 30).

Readings above 70 or below 30 are conventional RSI descriptions rather than instructions to sell or buy. An extreme reading can persist. Divergence means price and oscillator observations differ; it does not prove a reversal or make one signal universally most reliable.

Compare hypothetical RSI settings and record what each describes before looking at later prices. A pullback to 40–50 or a bounce to 50–60 is not a universal entry rule. TradeHQ's simplified RSI-style practice value should not be mistaken for a standard RSI calculation on historical provider closes.

MACD: Combining Trend and Momentum Signals

The Moving Average Convergence Divergence (MACD) is a versatile indicator that shows the relationship between two exponential moving averages — typically the 12-period and 26-period EMAs. The MACD line is the difference between these two EMAs, and the signal line is a 9-period EMA of the MACD line. The histogram shows the gap between them.

A positive histogram means the MACD line is above its signal line; a negative histogram means it is below. Those relationships are often called bullish and bearish respectively, but describe the selected calculations rather than the next price move. Crossovers can reverse in both trending and sideways samples; performance depends on the rules, period, costs and comparison used.

Combining indicators creates another hypothesis to evaluate, rather than guaranteeing the best results. Define each calculation, interval and decision rule, then compare against a simple baseline with the same costs and sample. TradeHQ does not provide a MACD chart overlay; journal examples are conceptual.

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