Technical indicators have a reputation problem. They are presented either as near-magical signals or as astrology for traders. Both framings miss what they actually are: simple arithmetic on prices that have already happened.
An indicator does not know anything. It summarises. That is genuinely useful — and it is the ceiling.
Moving averages
A moving average is the mean closing price over the last N periods, recalculated each day.
A 50-day average is the mean of the last 50 closes. A 200-day is the mean of the last 200. As new prices arrive, old ones drop out, so the line moves.
What it tells you: whether the current price is above or below its own recent average. Above the 200-day is conventionally read as a long-term uptrend; below it as a downtrend.
What it cannot tell you: anything about the future. An average of past prices is, definitionally, a description of the past. The 200-day average matters partly because so many participants watch it — which makes it somewhat self-fulfilling, not predictive.
Exponential moving averages (EMAs) weight recent prices more heavily, so they turn faster. That makes them more responsive and more prone to false signals — the standard trade-off.
RSI
The Relative Strength Index compares the average size of recent gains with the average size of recent losses over 14 periods, and expresses it from 0 to 100.
- Above 70 is conventionally "overbought"
- Below 30 is "oversold"
- 50 divides upward from downward momentum
The critical misunderstanding: overbought does not mean "about to fall". It means recent gains have been unusually one-sided compared with the previous 14 sessions. In a strong trend, RSI can sit above 70 for weeks while the price keeps rising. Treating an RSI of 72 as a sell signal has cost a great many people a great deal of a rally.
What RSI genuinely tells you is that a move has been persistent. What happens next is a separate question.
MACD
MACD is the gap between a 12-period and a 26-period exponential moving average, with a 9-period average of that gap as a "signal line". The histogram is the distance between the two.
What it tells you: whether short-term momentum is accelerating relative to longer-term momentum. The MACD line crossing above its signal line means the fast average is pulling away from the slow one.
Its built-in limitation: it is constructed from two lagging averages, so it is lagging twice over. MACD confirms trends that are already underway. It does not anticipate them, and it whipsaws badly in sideways markets.
Bollinger bands
A 20-period moving average with lines two standard deviations above and below it. The bands widen when volatility rises and narrow when it falls.
What it tells you: how far the current price sits from its recent average in units of its own volatility. Price near the upper band is high *relative to its recent range* — which in a strong trend is entirely normal, not a warning.
Band width is the more useful reading: narrow bands mean a quiet market, wide bands a volatile one.
Support and resistance
Pivot points are computed from the recent high, low and close by fixed formulas. Support levels sit below the current price, resistance above.
Why they sometimes work: many traders compute the same numbers from the same formulas, so orders cluster around them. That is genuine, but it makes them a coordination effect rather than a property of the market.
Why they often do not: a level "holding" or "breaking" is only identifiable afterwards. In advance they are reference lines, not thresholds.
What indicators cannot do
Every indicator above is a function of past prices. That means:
- They cannot anticipate news, policy decisions, or shocks
- They describe the trend that has happened, not the one that will
- They disagree with each other routinely, which is why summary readings count indicators rather than trusting one
- They work best as context, worst as instructions
How to use them honestly
The reasonable use is to answer factual questions. *Is gold above its 200-day average?* That has a yes-or-no answer. *What is its RSI?* That is a number. Both are facts, and facts are useful.
The unreasonable use is to convert those facts into a decision about your money, which requires knowing things indicators do not contain — your circumstances, your timeframe, and the future.
Our technical analysis pages publish every indicator above with its current value, computed from real daily closes, and state what each conventionally means. They do not say buy or sell, because that is not something arithmetic on past prices can honestly tell you.