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💹 Series 8: Mastering Technical Analysis

Day 5: RSI, MACD & Volume — Powerful Indicators Explained Simply

When I first started learning indicators, I felt overwhelmed.
There were too many lines, too many colors, and too many signals happening all at once.
I used to stare at the charts and think, “How does anyone make sense of this?”
If you’ve ever felt that way, trust me — you’re not alone.

But one day, a mentor told me something that changed everything.
He said, “Indicators are not fortune tellers. They are just tools that help you understand the strength of the current trend.”
And suddenly it clicked.
Indicators do not predict… they reveal.

Today, I want to explain three of the most powerful indicators in the simplest way possible:
RSI, MACD and Volume.
Once you understand these three, you’ll be miles ahead of most beginners.
They will help you see the market’s energy, momentum, exhaustion, and strength — all with just a few lines.

Let’s dive in together.

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🎯 Why Indicators Matter (But Not for Prediction)

Before I explain each indicator, I want you to understand this important mindset.
Indicators are not magic signals telling you to “buy now” or “sell now.”
They are helpers.
They give you clues.

Indicators matter because:

• They show you when price is moving too fast

• They show when buyers or sellers are becoming weak

• They reveal momentum behind the price

• They warn you of possible trend changes

• They help confirm your analysis

When you combine indicators with trendlines, support, resistance, and candlestick patterns, everything becomes clearer.
But alone, indicators are just tools — not answers.

🔵 1. RSI — The Indicator That Measures Overbought and Oversold

RSI stands for Relative Strength Index.
But you don’t need the fancy name.
Just remember this:
RSI tells you when the market has moved too much too quickly.

It moves on a scale from 0 to 100.
And there are only two important levels you must remember:

• Above 70 = Overbought

• Below 30 = Oversold

That’s it.
Simple.

🔹 What “Overbought” Really Means

When RSI goes above 70, it means price has gone up too fast.
It doesn’t mean the price must fall.
It just means buyers are getting tired.
The trend might slow down or reverse soon.

Think of it like running.
If you sprint at full speed for too long, you need to rest.
The market behaves the same way.

🔹 What “Oversold” Really Means

When RSI drops below 30, the stock has fallen too quickly.
Sellers might be getting tired.
Even if fear is high, the selling pressure may slow down.
This is often when buyers start looking for opportunities.

Oversold doesn’t mean “buy now.”
It just means the drop is losing strength.

🔹 When RSI Works the Best

From my experience, RSI works best when:

• The price is near support or resistance

• A clear trend exists

• You combine it with candlestick signals

• You check for divergence

RSI alone is not enough.
But with other tools, it becomes extremely powerful.

🔹 RSI Divergence — The Hidden Signal

This is one of the strongest signals RSI gives.
Divergence means price is moving in one direction, but RSI is moving in the opposite direction.

For example:

• Price makes new lows

• RSI makes higher lows

This means selling pressure is weakening.
A reversal may be near.

It’s like seeing smoke before the fire.
You know something is happening beneath the surface.

🔴 2. MACD — The Indicator That Shows Momentum

MACD looks complicated at first.
There are lines, crossovers, histograms…
But once you understand the logic, it becomes very easy.

MACD shows momentum.
Momentum means the strength of the trend.
It tells you whether buyers or sellers are gaining speed.

MACD has two important lines:

• MACD Line

• Signal Line

And one simple rule:
When MACD crosses above the signal line, momentum is bullish.
When MACD crosses below, momentum is bearish.

That’s the basic idea.

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🔹 MACD Crossovers — The Core Signal

A bullish crossover happens when the MACD line moves upward and crosses above the Signal line.
This shows buying momentum is rising.
It doesn’t guarantee the price will explode upward.
But it shows the wind is blowing in the buyers’ direction.

A bearish crossover is the opposite.
When MACD crosses below the signal line, sellers gain strength.
This often happens before a drop.

🔹 MACD Histogram — The “Energy Bar”

The histogram is the little bar chart under the MACD lines.
It shows momentum strength visually.
When bars get longer, the momentum is increasing.
When bars get shorter, momentum is weakening.

Think of it like a battery indicator.
You can see whether the market is charging or draining.

🔹 Why MACD Is So Useful

MACD works well because:

• It follows the trend

• It shows momentum

• It helps confirm reversals

• It works smoothly on higher time frames

• It filters out small noise

Many professional traders rely heavily on MACD because it’s stable and reliable.

🟧 3. Volume — The Indicator Every Trader Should Understand

Volume is the most important indicator, yet the most ignored.
Most beginners only look at price.
But price without volume is like sound without a voice.
You see movement, but you don’t know how strong it is.

Volume tells you:

• How many people are buying and selling

• How serious the move is

• Whether a breakout is real

• Whether a trend is weakening

• Whether big players are involved

When volume is high, you know something meaningful is happening.
When volume is low, the market is quiet.

🔹 High Volume = Strength

If the price moves up with strong volume, the trend is healthy.
Buyers are serious.
Money is flowing in.
This gives confidence.

But if price moves up on weak volume, it may be fake strength.
A small push can easily pull it back down.

🔹 Low Volume = Weak Movement

Low volume often means:

• The market is waiting

• Traders are unsure

• The move is not strong

• Breakouts can fail easily

Low volume before big news is common.
Traders stay silent until something real happens.

🔹 Volume Spikes — The Market Is Shouting

A sudden jump in volume is a major clue.
It means something triggered a wave of buying or selling.
Volume spikes often appear at:

• Breakouts

• Trend reversals

• Panic selling

• Strong accumulation

When volume spikes, I always pay attention.
It usually marks a turning point.

🧩 How to Combine RSI, MACD & Volume (The Perfect Trio)

Each indicator is strong on its own.
But together, they form a powerful combination.
Let me show you a simple way to use all three.

🔹 Scenario: Price Approaching Support

1. RSI is below 30 → Market is oversold.

2. MACD is forming a bullish crossover → Momentum shifting.

3. Volume is rising → Buyers are stepping in.

When all three align, the probability of a reversal increases.
This is how I find strong entry points.

🔹 Scenario: Price Hitting Resistance

1. RSI above 70 → Market is tired.

2. MACD is losing strength → Histogram shrinking.

3. Volume decreasing → Buyers slowing down.

This tells me the uptrend may be weakening.
I become cautious or wait for a reversal.

🎛 Why I Never Use Indicators Alone

Indicators are like ingredients.
One ingredient cannot make a meal.
But when you mix them correctly, everything comes together.

I always combine indicators with:

• Trendlines

• Support and resistance

• Candlestick patterns

• Market structure

• Volume

This helps me avoid mistakes.
It keeps me objective and calm.

Indicators confirm your analysis — they don’t replace it.

📘 Examples Explained Simply

Let me give you one easy example to bring everything together.

Imagine a stock that’s been rising for many days.
It’s reaching a resistance level.
You check your indicators:

RSI:

Above 70 → Buyers might be tired.

MACD:

Bearish crossover forming → Momentum fading.

Volume:

Dropping → Fewer buyers pushing the price.

What does this mean?
It means the uptrend is weakening.
A reversal might be coming.
This is where I avoid chasing the price.

Another scenario.

A stock is falling sharply.
Fear is high.
Everyone panics.

You check your indicators:

RSI:

Below 30 → Oversold.

MACD:

Histogram shrinking → Selling momentum slowing.

Volume:

Sudden spike → Buyers stepping in.

This could be a reversal zone.
The selling storm may be ending.

With this combination, you make smarter decisions.

🌟 Simple Rules You Can Use Immediately

To make it easy, here are rules you can apply from today:

RSI Rules

• Above 70 → Market overheated

• Below 30 → Market oversold

• Divergence → Trend weakening

MACD Rules

• Bullish crossover → Buyers gaining strength

• Bearish crossover → Sellers gaining strength

• Histogram shrinking → Momentum slowing

Volume Rules

• High volume = strong move

• Low volume = weak move

• Volume spike = important event

These rules will guide you through any chart.

Final Takeaways

RSI, MACD and Volume are not complicated indicators.
They only look confusing because most traders use them the wrong way.
But when you understand the psychology behind them, everything becomes simple.

Remember this:

• RSI shows exhaustion

• MACD shows momentum

• Volume shows conviction

Together, they give you clarity.
Together, they make you a smarter investor.
Together, they remove a lot of guesswork from your decisions.

If you can master these three indicators, you’re already ahead of 80% of retail traders who rely only on “gut feeling.”

📣 Call to Action

If you want me to create a full step-by-step tutorial showing real chart examples using RSI, MACD and Volume, reply “SHOW ME INDICATORS” and I’ll prepare a live breakdown for you.

And if you’re enjoying this Mastering Technical Analysis series, let me know — your feedback encourages me to create even more powerful lessons for you.

Let’s continue building your confidence, one skill at a time.

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DISCLAIMER

I make no representations, warranties, or guarantees, whether expressed or implied, that the content provided is accurate, complete, or up-to-date. Past performance is not indicative nor a guarantee of future returns.

I am an individual content creator and not regulated or licensed by the Monetary Authority of Singapore (MAS) as I do not provide investment services.

All forms of investments carry risks, including the risk of losing your entire invested amount. Such activities may not be suitable for everyone. You are strongly encouraged to seek advice from a professional financial advisor if you have any doubts or concerns.