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Section 2 ยท Module 2.2

Technical Indicators

6 min read

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Moving Averages (SMA vs. EMA)

SMA gives equal weight to all periods; EMA weights recent prices more heavily and reacts faster to trend shifts.

Price consistently above a rising 50- or 200-day EMA confirms an uptrend โ€” a core filter for swing traders.

RSI โ€” Momentum Oscillator

RSI (0โ€“100) measures velocity of price change:

  • Above 70: Overbought โ€” trend strong but extended.
  • Below 30: Oversold โ€” bounce possible.
  • Swing filter: In uptrends, pullbacks to RSI 40โ€“50 often offer entries.

Bollinger Bands

20-period SMA with upper/lower bands at ยฑ2 standard deviations. A tight squeeze signals low volatility and often precedes an explosive breakout.

Knowledge check

20-period Bollinger Bands contract to their tightest width in six months. What does this predict?