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Technical Indicators Flashcards

6 cards from real Day Trading practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Technical Indicators flashcards as text

  1. What does the Relative Strength Index (RSI) primarily measure?

    Answer: The speed and magnitude of recent price changes to evaluate overbought or oversold conditions

    RSI measures the velocity of recent price movements on a scale of 0–100, signaling overbought (>70) or oversold (<30) conditions.

  2. When a stock's price makes a new high but the RSI fails to confirm with a new high, this is called:

    Answer: Bearish divergence

    Bearish divergence occurs when price reaches a new high while RSI makes a lower high, warning of potential trend reversal.

  3. The MACD indicator is calculated by subtracting which two exponential moving averages?

    Answer: 12-period EMA from 26-period EMA

    MACD is the 12-period EMA minus the 26-period EMA, with a 9-period signal line plotted on top.

  4. In day trading, a 'MACD crossover' buy signal occurs when:

    Answer: The MACD line crosses above the signal line

    A bullish MACD crossover happens when the MACD line crosses above the signal line, indicating growing upward momentum.

  5. Bollinger Bands consist of which three components?

    Answer: A simple moving average, an upper band, and a lower band set at standard deviations

    Bollinger Bands use a 20-period SMA as the middle band, with upper and lower bands plotted two standard deviations away.

  6. What does it mean when a stock's price 'walks the band' along the upper Bollinger Band?

    Answer: The stock is in a strong uptrend with sustained momentum

    Price hugging the upper Bollinger Band consistently indicates strong bullish momentum rather than an immediate reversal.