1. Support and Resistance Levels

These are psychological price levels where an asset historically struggles to move past.

• Support: A “floor” where buying interest is strong enough to stop the price from falling further.

• Resistance: A “ceiling” where selling pressure typically halts a price rally.

• Usage: Identifying these zones helps traders determine where to buy (near support) or sell (near resistance).

2. Candlestick Charts

Unlike simple line charts, candlesticks provide a detailed “story” of price action within a specific time frame.

• Components: Each candle shows the High, Low, Open, and Close prices.

• Color: Green (or white) means the price closed higher than it opened; Red (or black) means it closed lower.

• Wicks: The thin lines (shadows) above and below the body show the price extremes reached during that period.

3. Average Directional Index (ADX)

The ADX is the ultimate gauge for trend strength, regardless of the trend’s direction (up or down).

• Scale: It oscillates between 0 and 100.

• Strong Trend: A value above 25 indicates a strong, sustainable trend.

• No Trend: A value below 20 suggests a weak or sideways (ranging) market where trend-following strategies might fail.

4. Relative Strength Index (RSI)

RSI is a momentum oscillator used to identify if a crypto asset is overextended.

• Overbought: A reading above 70 suggests the asset may be due for a price pullback.

• Oversold: A reading below 30 suggests the asset may be undervalued and due for a bounce.

• Usage: It helps traders avoid “buying the top” or “selling the bottom.”

5. Trend Lines

Trend lines are simple diagonal lines drawn to connect a series of price points.

• Uptrend: Drawn by connecting higher lows, acting as dynamic support.

• Downtrend: Drawn by connecting lower highs, acting as dynamic resistance.

• Confirmation: The more points a trend line touches, the more valid and “stronger” it becomes.

6. Moving Averages (MAs)

MAs smooth out price “noise” by creating a constantly updated average price over a set period.

• Types: The Simple Moving Average (SMA) gives equal weight to all prices, while the Exponential Moving Average (EMA) reacts faster to recent price changes.

• Golden Cross: A bullish signal occurring when a short-term MA (e.g., 50-day) crosses above a long-term MA (e.g., 200-day).

7. On-Balance Volume (OBV)

OBV uses trading volume to predict changes in price before they happen.

• Concept: It adds volume on “up” days and subtracts it on “down” days to show the flow of money.

• Divergence: If the price is rising but OBV is falling, it indicates that the move lacks “real” buying pressure and may soon reverse.

8. Awesome Oscillator (AO)

Developed by Bill Williams, the AO measures market momentum by comparing recent market speed to long-term speed.

• Zero Line: When the AO histogram crosses above zero, it signals bullish momentum; crossing below zero signals bearish momentum.

• Visual: It appears as a colorful histogram that turns green when momentum is increasing and red when it is decreasing.

9. Fibonacci Pivot Points

This tool combines standard pivot points with Fibonacci ratios (like 38.2% and 61.8%) to predict future support and resistance levels.

• Precision: Because so many traders use Fibonacci levels, these points often become “self-fulfilling prophecies” where price reacts exactly at the predicted level.

• Usage: Ideal for setting precise take-profit and stop-loss orders in volatile markets.

10. Parabolic SAR (Stop and Reverse)

The Parabolic SAR is a trend-following indicator shown as small dots above or below the price.

• Bullish: Dots below the price indicate an uptrend.

• Bearish: Dots above the price indicate a downtrend.

• Reversal: When the dots flip from one side to the other, it signals a potential trend reversal and acts as an excellent tool for placing trailing stop-losses.