Step 1: Market structure
Identify swing highs and lows. Higher highs and higher lows describe an uptrend; lower highs and lower lows describe a downtrend; overlapping swings describe a range. Always begin on a higher timeframe.
Step 2: Support and resistance
Mark zones where price reversed at least twice. These help you plan where an idea is wrong. Full guide: Support and Resistance Explained.
Step 3: A few indicators, understood well
- Moving averages smooth price to show direction; crossovers lag.
- RSI measures momentum on a 0–100 scale; "overbought" can stay overbought in strong trends.
- Bollinger Bands show volatility around a moving average; band squeezes often precede expansion — in either direction.
- MACD compares two moving averages; useful for momentum context, not timing alone.
Limits of technical analysis
Indicators are derived from price, so they cannot know more than price itself. On very short timeframes and platform-generated OTC feeds, randomness dominates. Use analysis to manage risk, not to seek certainty.
