The trading landscape has become accessible and lucrative for average individuals worldwide, offering excellent opportunities to profit even from limited investments. However, the lowered barriers to entry do not mean that traders will have an easier time figuring out the correct assets to purchase or sell. To achieve trading success, investors must employ sound trading strategies and adopt analytical tools to simplify their efforts. 

Numerous ratios, performance indicators and analytical practices can paint a clear picture of the trading markets. In this article, we will discuss the top five technical analysis indicators, including the Moving Average (MA), Relative Strength Index (RSI), Parabolic SAR (PSAR), Bollinger Bands, and Fibonacci Retracements. 

The Moving Average Indicator (MA)

Despite its trivial nature, the moving average indicator is among the most common and highly utilised analysis indicators. MA is calculated by dividing the total asset price by several respective periods. This formula irons out the outliers and helps the traders see the general price trend more clearly. There are three significant ways to calculate MA – Simple Moving Average (SMA), Exponential Moving Average (EMA), and Weighted Moving Average (WMA). 

Relative Strength Index (RSI)

RSI measures the speed of price changes for a given tradable asset. The RSI ratio divides the average price increases over the last 14 periods by the corresponding losses in the same timeframe. The ratio range is from 0 to 100. If the RSI indicator clears the 70 mark, it suggests that an underlying asset might be overbought. This means the potential selling wave is expected, which will probably decrease the asset’s price. Conversely, an RSI under 30 implies the exact opposite. 

Parabolic SAR Indicator (PSAR)

PSAR indicator is a great metric to identify possible entry and exit points concerning a particular tradable asset. The PSAR ratio pinpoints the potential price reversal trends and informs the traders when it might be a good time to purchase or sell the asset. Generally, if the PSAR graph is dotted above the price line, it signals a potential price gain for the asset. Conversely, a price decrease is expected if the PSAR graph is dotted below the price line. 

Bollinger Bands (BB)

BB indicator is a great analysis tool for gauging the asset volatility and the possible price change. While BB has a complex calculation formula, it is visualised simply as three bands moving alongside the price trend. The upper and lower bands indicate the standard deviation of the asset price. Anytime the price reaches upper or lower bands, the price reversal is highly likely, as the asset price witnesses outliers. 

Fibonacci Retracement (FR)

FR visualise the market support or resistance points by drawing lines over the price variations on the asset price graph. As a result, traders can follow the overall trend of Fibonacci levels and see where the asset price reversal is most likely. While the FR ratios are fixed, they generally accurately measure expected price changes. 

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