Technical Indicators Reference
A comprehensive guide to all technical indicators available in MangoLabs. Each indicator includes detailed parameter explanations, interpretation guidelines, and practical use cases for building effective trading strategies.
Indicator Categories
Indicators are organized by their primary function:
- Momentum: Measure speed of price changes (RSI, Stochastic, ROC)
- Trend: Identify direction and strength of trends (SMA, EMA, ADX)
- Volatility: Measure price fluctuation intensity (ATR, Bollinger Bands)
- Volume: Analyze trading volume patterns (OBV, VWAP)
Momentum Indicators
Momentum indicators measure the rate of change in price movements, helping identify overbought/oversold conditions and potential reversals.
RSI (Relative Strength Index)
Measures the magnitude of recent price changes to evaluate overbought or oversold conditions. Values range from 0 to 100.
PARAMETERS
- Period: Lookback period (default: 14)
- Source: Price data to use (default: close)
OUTPUT
- Value: 0-100 range
- Levels: <30 = oversold, >70 = overbought
INTERPRETATION
- RSI < 30: Market is oversold, potential buying opportunity
- RSI > 70: Market is overbought, potential selling opportunity
- Divergence: Price makes new high but RSI doesn't = bearish signal
USE CASES
- Mean reversion strategies: Buy when RSI < 30, sell when RSI > 70
- Trend confirmation: In uptrends, look for RSI > 50; in downtrends, RSI < 50
- Divergence trading: Identify potential reversals before they occur
MACD (Moving Average Convergence Divergence)
Shows the relationship between two exponential moving averages. Useful for identifying trend changes and momentum shifts.
PARAMETERS
- Fast Period: Short EMA (default: 12)
- Slow Period: Long EMA (default: 26)
- Signal Period: Signal line EMA (default: 9)
- Source: Price data (default: close)
OUTPUT
- MACD Line: Fast EMA - Slow EMA
- Signal Line: EMA of MACD line
- Histogram: MACD - Signal
INTERPRETATION
- MACD crosses above Signal: Bullish signal, potential buy
- MACD crosses below Signal: Bearish signal, potential sell
- Histogram expanding: Momentum increasing in current direction
USE CASES
- Crossover strategies: Buy on bullish crossover, sell on bearish crossover
- Divergence detection: Spot potential reversals before price confirms
- Momentum confirmation: Combine with trend indicators for robust signals
Stochastic Oscillator
Compares current closing price to its price range over a period. Identifies overbought/oversold conditions and momentum.
PARAMETERS
- K Period: Lookback period (default: 14)
- D Period: Smoothing period (default: 3)
- Smooth: Additional smoothing (default: 3)
OUTPUT
- %K Line: Fast stochastic (0-100)
- %D Line: Slow stochastic (smoothed %K)
INTERPRETATION
- Value < 20: Oversold condition, potential buy signal
- Value > 80: Overbought condition, potential sell signal
- %K crosses above %D: Bullish signal
USE CASES
- Range-bound trading: Buy at oversold, sell at overbought levels
- Crossover signals: Trade %K and %D line crossovers
- Divergence analysis: Identify weakening trends early
ROC (Rate of Change)
Measures the percentage change in price between the current price and the price a certain number of periods ago.
PARAMETERS
- Period: Lookback period (default: 12)
- Source: Price data (default: close)
OUTPUT
- Value: Percentage change
- Range: Positive = upward momentum, Negative = downward momentum
INTERPRETATION
- ROC > 0: Upward momentum, prices rising
- ROC < 0: Downward momentum, prices falling
- Extreme values: Indicate overbought/oversold conditions
USE CASES
- Momentum trading: Enter when ROC confirms strong momentum
- Trend strength: Higher ROC values indicate stronger trends
- Divergence signals: Price vs ROC divergence shows weakening momentum
Trend Indicators
Trend indicators help identify the direction and strength of market trends, essential for trend-following strategies.
SMA (Simple Moving Average)
Calculates the average price over a specified number of periods. Smooths price data to identify trend direction.
PARAMETERS
- Period: Number of candles (default: 20, 50, 200)
- Source: Price data (default: close)
OUTPUT
- Value: Average price over period
- Line: Smooth line following price
INTERPRETATION
- Price above SMA: Uptrend, bullish bias
- Price below SMA: Downtrend, bearish bias
- SMA slope: Rising = uptrend, falling = downtrend
USE CASES
- Trend identification: Trade in direction of SMA slope
- Support/Resistance: SMA often acts as dynamic support or resistance
- Crossover systems: Trade when fast SMA crosses slow SMA (Golden/Death Cross)
EMA (Exponential Moving Average)
Similar to SMA but gives more weight to recent prices, making it more responsive to new information.
PARAMETERS
- Period: Number of candles (default: 12, 26, 50)
- Source: Price data (default: close)
OUTPUT
- Value: Weighted average (recent prices emphasized)
- Responsiveness: Faster than SMA
INTERPRETATION
- Same as SMA but reacts faster to price changes
- Better for short-term trading and fast-moving markets
- Less lag than SMA, but more false signals in choppy markets
USE CASES
- Short-term trend trading: More responsive to recent price action
- Entry timing: Use EMA crossovers for precise entry points
- Combine with SMA: Use EMA for signals, SMA for overall trend
WMA (Weighted Moving Average)
Assigns linearly increasing weights to more recent prices. More responsive than SMA but less than EMA.
PARAMETERS
- Period: Number of candles (default: 20)
- Source: Price data (default: close)
OUTPUT
- Value: Linearly weighted average
- Speed: Between SMA and EMA
INTERPRETATION
- Balances responsiveness with smoothness
- Less whipsaw than EMA, more responsive than SMA
- Good middle ground for medium-term trading
USE CASES
- Medium-term trend following: Balance between speed and stability
- Alternative to SMA/EMA: Test which works best for your strategy
- Reduce lag: More responsive than SMA without EMA's sensitivity
ADX (Average Directional Index)
Measures trend strength regardless of direction. Helps determine if market is trending or ranging.
PARAMETERS
- Period: DI smoothing (default: 14)
- ADX Period: ADX smoothing (default: 14)
OUTPUT
- ADX Line: Trend strength (0-100)
- +DI/-DI: Directional indicators
INTERPRETATION
- ADX < 20: Weak trend or ranging market
- ADX 20-40: Strong trend developing
- ADX > 40: Very strong trend, favorable for trend strategies
USE CASES
- Trend filtering: Only trade trend strategies when ADX > 25
- Strategy selection: High ADX = trend strategy, low ADX = mean reversion
- Exit timing: Falling ADX indicates trend weakening
Volatility Indicators
Volatility indicators measure the magnitude of price movements, helping assess risk and identify potential breakouts.
ATR (Average True Range)
Measures market volatility by calculating the average range between high and low prices over a period.
PARAMETERS
- Period: Lookback period (default: 14)
OUTPUT
- Value: Average range in price units
- Interpretation: Higher = more volatile
INTERPRETATION
- Rising ATR: Increasing volatility, larger price swings
- Falling ATR: Decreasing volatility, market consolidating
- High ATR: Wider stop losses needed, bigger potential moves
USE CASES
- Position sizing: Adjust position size based on volatility
- Stop loss placement: Set stops at 2x or 3x ATR distance
- Breakout confirmation: Rising ATR confirms breakout strength
Bollinger Bands
Plots bands above and below a moving average at a distance determined by standard deviations. Shows volatility and potential reversal points.
PARAMETERS
- Period: MA period (default: 20)
- Std Dev: Band distance (default: 2)
- Source: Price data (default: close)
OUTPUT
- Upper Band: MA + (StdDev × multiplier)
- Middle Band: Simple moving average
- Lower Band: MA - (StdDev × multiplier)
INTERPRETATION
- Price at upper band: Overbought, potential reversal down
- Price at lower band: Oversold, potential reversal up
- Band squeeze: Low volatility, breakout likely coming
- Band expansion: High volatility, strong trend in progress
USE CASES
- Mean reversion: Buy at lower band, sell at upper band in ranging markets
- Breakout trading: Enter when price breaks bands with expanding volatility
- Volatility analysis: Narrow bands = low volatility, wide bands = high volatility
Volume Indicators
Volume indicators analyze trading volume patterns to confirm trends and identify potential reversals.
OBV (On-Balance Volume)
Cumulative indicator that adds volume on up days and subtracts volume on down days. Shows buying/selling pressure.
PARAMETERS
- None: Uses raw price and volume data
OUTPUT
- Value: Cumulative volume balance
- Trend: Rising = accumulation, falling = distribution
INTERPRETATION
- Rising OBV: Buying pressure, confirms uptrend
- Falling OBV: Selling pressure, confirms downtrend
- Divergence: Price up but OBV down = bearish signal
USE CASES
- Trend confirmation: OBV should move with price in strong trends
- Divergence trading: OBV divergence signals potential reversals
- Breakout validation: Rising OBV confirms breakout authenticity
Volume SMA
Simple moving average of trading volume. Helps identify unusual volume spikes or drops.
PARAMETERS
- Period: Lookback period (default: 20)
OUTPUT
- Value: Average volume over period
- Comparison: Current volume vs average
INTERPRETATION
- Volume > SMA: Above-average interest, potential breakout
- Volume < SMA: Below-average interest, consolidation
- Spike in volume: Significant event, pay attention
USE CASES
- Breakout confirmation: Require volume > 1.5x average for valid breakouts
- Low volume filter: Avoid trading during low volume periods
- Abnormal activity: Detect unusual market participation
VWAP (Volume Weighted Average Price)
Average price weighted by volume. Represents the average price traders paid during the period.
PARAMETERS
- Period: Calculation period (default: session/daily)
OUTPUT
- Value: Volume-weighted price
- Level: Dynamic support/resistance
INTERPRETATION
- Price above VWAP: Bullish, buyers in control
- Price below VWAP: Bearish, sellers in control
- VWAP acts as support/resistance: Price often bounces from VWAP
USE CASES
- Intraday trading: Use as dynamic support/resistance for day trades
- Entry/exit timing: Buy near VWAP in uptrends, sell near VWAP in downtrends
- Fair value: VWAP represents "fair price" based on volume
When to Use Each Indicator Type
Ranging Markets
When markets are moving sideways without clear trend:
- RSI, Stochastic (oversold/overbought)
- Bollinger Bands (mean reversion)
- Low ADX confirms ranging condition
Trending Markets
When markets show clear directional movement:
- SMA, EMA, WMA (trend direction)
- MACD (trend momentum)
- ADX (trend strength confirmation)
High Volatility
When price swings are large and frequent:
- ATR (measure volatility intensity)
- Bollinger Bands (identify extremes)
- Wider stops and targets needed
Volume Analysis
When validating price movements with volume:
- OBV (confirm trend strength)
- Volume SMA (detect abnormal activity)
- VWAP (intraday fair value)
Pro Tip: Combine Indicators
The most robust strategies combine indicators from different categories. For example: Use ADX to confirm trend strength, EMA to identify direction, and RSI to time entries. This multi-layered approach reduces false signals and improves win rate.