RSI, MACD and Stochastic

Oscillators measure momentum: how fast price is moving and whether that speed is growing or fading. They are drawn in a separate pane under the chart and swing between fixed levels or around a zero line. The three you'll meet most often are RSI, MACD and the Stochastic.

RSI (Relative Strength Index)

RSI compares the size of recent gains with recent losses, usually over 14 candles, and scales the result from 0 to 100. Above 70 is traditionally called overbought, below 30 oversold.

Those labels are misleading on their own. In a strong uptrend RSI can sit above 70 for a long time while price keeps rising. A more useful reading: RSI holding above 40–50 in pullbacks suggests an uptrend is healthy, and holding below 50–60 in rallies suggests a downtrend is.

Divergence

Divergence is when price and the oscillator disagree. If price makes a higher high but RSI makes a lower high, the new high was reached with less momentum: bearish divergence. A lower low in price with a higher low in RSI is bullish divergence.

MACD

MACD (Moving Average Convergence Divergence) is the 12-period EMA minus the 26-period EMA. A 9-period EMA of that value is the signal line, and the gap between them is drawn as a histogram. MACD above zero means the shorter average is above the longer one, an upward bias. Crossovers of MACD and its signal line, and a shrinking histogram, show momentum changing.

Stochastic

The Stochastic shows where the latest close sits within the high–low range of the last 14 candles, from 0 (at the low) to 100 (at the high). It has a fast line (%K) and a smoothed line (%D). Readings above 80 and below 20 are the usual extremes. It is quicker than RSI, which suits ranges but makes it noisy in trends.