Lines

Trend lines are one of the most basic and widely used technical analysis tools. They are used to identify the direction of a trend and to determine potential support and resistance levels. Trend lines are drawn by connecting two or more points on a price chart that represent significant highs or lows. A trend line that connects two or more higher lows is considered an uptrend line, while a trend line that connects two or more lower highs is considered a downtrend line. Trend lines can be used in conjunction with other technical indicators to confirm or deny potential trading opportunities.

Moving Averages

Moving averages are another widely used technical analysis tool that can help traders identify trends and potential trading opportunities. A moving average is simply the average price of a security over a certain period of time. The most commonly used moving averages are the 50-day and 200-day moving averages. When the price of a security is above its moving average, it is considered to be in an uptrend, while when the price is below its moving average, it is considered to be in a downtrend. Moving averages can also be used to identify potential support and resistance levels.

Relative Strength Index (RSI)

The relative strength index (RSI) is a momentum oscillator that measures the strength of a security's price action. It is used to identify potential overbought and oversold conditions in a security. The RSI is calculated by comparing the average gains and losses of a security over a certain period of time. When the RSI is above 70, it is considered overbought, and when it is below 30, it is considered oversold. Traders can use the RSI to identify potential trend reversals and to determine potential entry and exit points.

Bollinger Bands

Bollinger Bands are a technical analysis tool that is used to measure volatility. They consist of three lines—an upper band, a lower band, and a middle band—that are based on a security's moving average and standard deviation. The upper and lower bands are placed two standard deviations away from the moving average, and they expand and contract as volatility increases and decreases. Traders use Bollinger Bands to identify potential trading opportunities when the price of a security breaks through one of the bands. They can also be used to identify potential support and resistance levels.