What are the most important technical indicators to look for in a trade?
This is directed towards technical analysts of all shapes and sizes - what are the most important technical indicators to look at when you make a trade? Explain why for each and also indicate if you look at them in any type of sequential order (e.g. sector bullish percentile first, stock's relative strength second, etc.).
Best Answer
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EthanR answered one year ago …
I feel that the most important technical indicator is the moving average.
According to www.stockcharts.com, "Moving averages are one of the most popular and easy to use tools available to the technical analyst. They smooth a data series and make it easier to spot trends, something that is especially helpful in volatile markets. They also form the building blocks for many other technical indicators and overlays."
Investopedia says, "An indicator frequently used in technical analysis showing the average value of a security's price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance...
Typically, upward momentum is confirmed when a short-term average (e.g.15-day) crosses above a longer-term average (e.g. 50-day). Downward momentum is confirmed when a short-term average crosses below a long-term average."
So it seems to me that the moving average tends to incorporate Relative Strength and bullishness within its function. And while looking at the BPI and RSI numbers are great, if one were on a desert island and only had access to seeing the moving averages and not the BPI and RSI numbers, they would still do very well in their trading.
