Moving averages, RSI, support & resistance, and momentum — explained simply.
Technical analysis is the study of a stock's price and volume history to gauge the balance between buyers and sellers. Unlike fundamental analysis (which looks at a company's earnings and financials), technical analysis focuses on the chart itself. It won't tell you what a company is "worth," but it can help you understand trend, timing, and risk. Here's how to read the most common indicators you'll see on Indian Stock Tracker.
A moving average smooths out daily noise to reveal the underlying trend. The two most-watched are the 50-day and 200-day simple moving averages (SMA). As a rule of thumb:
The Relative Strength Index (RSI) measures the speed of recent price changes on a scale of 0 to 100. Readings above 70 are traditionally called "overbought" (the stock has risen fast and may pause), while readings below 30 are "oversold." RSI is most useful as context, not a standalone trigger — strong trends can stay overbought or oversold for a long time.
MACD (Moving Average Convergence Divergence) compares two moving averages to show shifts in momentum. When the MACD line crosses above its signal line, momentum is turning up; a cross below suggests momentum is fading. Traders watch the histogram to see whether momentum is strengthening or weakening.
Support is a price zone where buying has repeatedly emerged, acting like a floor. Resistance is a zone where selling has repeatedly appeared, acting like a ceiling. These levels help you frame risk: a trader might plan to enter near support and set a stop-loss just below it, while watching resistance as a potential exit. When price decisively breaks resistance on strong volume, that old ceiling can become new support.
Volume tells you how much conviction is behind a move. A breakout on high volume is more reliable than one on thin volume, which can fizzle out. Rising price with rising volume confirms a trend; rising price with falling volume can be a warning that the move is running out of steam.
No single indicator is a crystal ball. The strongest setups usually show several signals agreeing — for example, price above the 200-day SMA, a bullish MACD crossover, RSI trending up from a healthy level, and a breakout confirmed by volume. On Indian Stock Tracker, each stock's analysis page combines these into a technical score and highlights key support and resistance levels so you can see the picture at a glance.
This article is for educational purposes only and is not investment advice. Always do your own research and consult a qualified financial adviser.