Here’s another example, with the RSI and the MACD this time.
When the RSI reached the overbought area and gave a sell signal, the MACD soon followed with a downward crossover, which is also a sell signal.
And, as you can see, the price did move downhill from there.
Hooray for multiple indicators!
Later on, the RSI dipped to the oversold region and gave a buy signal.
A few hours after, the MACD made an upward crossover, which is also a buy signal.
From there, the price made a steady climb.
You probably noticed in this example that the RSI gives signals ahead of the MACD.
Because of the various properties and magic formulas for the technical indicators, some really do give early signals while others are a bit delayed.
You’ll learn more about this in sixth grade.
As you continue your journey as a trader, you will discover which indicators work best for you.
We can tell you that we like using MACD, the Stochastic, and RSI, but you might have a different preference.
Every trader out there has tried to find the “magic combination” of indicators that will give them the right signals all the time, but the truth is that there is no such thing.
Study each indicator on its own until you know the tendencies of how it behaves relative to price movement, and then come up with your own combination that YOU understand and that fits your trading style.
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