Technical Analysis 102: Simple Strategies Using Moving Averages, RSI, and MACD

Hemon Vongprachith
Technical Analysis 102: Simple Strategies Using Moving Averages, RSI, and MACD

Welcome back, chart warriors! In Part 1, we introduced the basics of technical analysis—trendlines, support/resistance, and key indicators. Now it’s time to turn that knowledge into action.

This article breaks down three popular indicators and how to use them in real-world trading setups that even beginners can try (with proper risk management, of course).

 1. Moving Averages: Spotting Trends Like a Pro

What is it again?
A Moving Average (MA) smooths out price action to help identify the trend’s direction.

Common types:

• SMA – Simple Moving Average (equal weighting)
• EMA – Exponential Moving Average (more sensitive to recent prices)

Common strategies:

– Golden Cross & Death Cross

• Golden Cross: 50-day MA crosses above the 200-day MA = bullish
• Death Cross: 50-day MA crosses below the 200-day MA = bearish

– Short-term Trend Strategy
Use 9 EMA and 21 EMA

• Buy when 9 EMA crosses above 21 EMA
• Sell when 9 EMA crosses below 21 EMA

✅ Great for trend-following trades
❌ Weak in choppy, sideways markets

2. RSI: Measuring Market Momentum

Relative Strength Index (RSI) tells you whether a stock is overbought or oversold, ranging from 0 to 100.

• RSI > 70 → Overbought (price might fall soon)
• RSI < 30 → Oversold (price might bounce back)

Strategy: RSI + Support/Resistance Combo

 Buy Setup:

• RSI below 30 + near support level = potential rebound

– Sell Setup:

• RSI above 70 + near resistance = potential pullback

✅ Simple and reliable for timing entries
❌ Not effective alone—needs confirmation

3. MACD: Catching Trend Reversals Early

Moving Average Convergence Divergence (MACD) uses two EMAs (12 and 26 periods) and a signal line (9 EMA).

MACD Setup:

• When MACD Line crosses above Signal Line = Bullish crossover
• When MACD Line crosses below Signal Line = Bearish crossover

Bonus: MACD Histogram
The bars show the strength of momentum. Growing bars = trend strengthening.

Strategy: MACD Crossover + Volume Spike

-Buy Signal:

• MACD crossover (bullish) + volume spike = strong buying pressure

– Sell Signal:

• MACD crossover (bearish) + volume drop = trend weakening

✅ Works well for swing trades
❌ Lags behind price action—avoid during fast-moving news events

 Bonus Tip: Combine Indicators for Better Accuracy

One indicator = probability
Two indicators = higher confidence
Three that agree? That’s your entry point! Example:

 RSI < 30 + Price near Support + MACD bullish crossover = STRONG BUY SIGNAL

Final Thoughts: Always Manage Risk

Even the best technical setups fail. That’s why risk management is key. Set:

• Stop-loss levels (just below support or a moving average)
• Take-profit levels (near resistance or key fib levels)
• Never risk more than 1–2% of your capital on one trade.

The goal isn’t to predict perfectly it’s to make smart, repeatable decisions with an edge.

Recap Checklist – Quick Guide

Tool	Use It To	Best Used When
Moving Averages	Identify trend direction	Trending markets
RSI	Spot overbought/oversold zones	Reversals or entries
MACD	Catch momentum shifts	Swing trades, trend changes