Learn · Chapter 07 of 09
Indicators
Indicators compress price history into one readable line. This chapter covers the six that earn their screen space — what each actually measures, the settings that suit NSE volatility, and how to combine at most two without paralysis.
Core · 5 lessons · 16 min read
Key takeaways
- One trend indicator + one momentum indicator is plenty; more = slower decisions.
- Indicators confirm structure — they never override broken support or trend.
- Tune lengths to NSE volatility; defaults built for US large-caps often lag here.
Lesson 1
RSI: momentum gauge, not buy/sell button
- Standard 14-period; overbought 70 / oversold 30 are context, not triggers.
- In strong Nifty uptrends RSI pins above 50 — buy 50–60 pullbacks, not 30 tags.
- Bullish divergence (price lower low, RSI higher low) at support warns of johnny-come-lately shorts.
Lesson 2
MACD: trend + momentum in one
- 12/26/9 standard; histogram expansion shows acceleration, contraction warns early.
- Trade crossovers only in the direction of the daily structure — counter-trend MACD crosses chop.
- MACD above zero line = trade longs; below = shorts or stand aside.
Lesson 3
Supertrend and ATR trailing
- Supertrend (10, 3) is India's favourite trend filter — green = hold longs, red = step aside.
- Whipsaws in sideways Nifty phases; pair with a horizontal level before acting.
- ATR-based stops (1.5–2x ATR) adapt to volatility better than fixed percentages.
Lesson 4
Bollinger Bands and VWAP
- Bollinger squeeze (low bandwidth) precedes expansion — direction unknown until the break.
- Walking the upper band = strength, not automatic short; wait for a close back inside.
- VWAP is the intraday fair-price line: above = buyers in control, below = sellers. Institutions benchmark to it.
Lesson 5
Volume indicators: OBV and delivery
- OBV rising with price confirms accumulation; OBV diverging warns of weak hands.
- NSE delivery % + OBV together beat either alone for swing confirmation.
- No indicator replaces price structure — if RSI says buy but structure breaks down, trust structure.
Mistakes that cost money
- Shorting strong uptrends because RSI crossed 70.
- Flipping Supertrend on every 15-minute flip in a sideways market.
- Stacking RSI + Stochastic + MACD and waiting for unanimous agreement that never comes.
Chapter FAQ
Which two indicators for beginners?
50-DMA (trend) + RSI-14 (momentum timing at pullbacks). Add VWAP intraday and Supertrend for trailing once those two feel natural.
Best Supertrend settings for NSE?
10, 3 is the common starting point for daily charts. Shorten to 7, 3 for intraday 15-minute charts and accept more whipsaw on range days.
Why does RSI stay overbought in rallies?
RSI measures velocity, not value. Strong trends sustain high velocity for weeks — overbought readings describe strength, and shorts against them fund the rally.
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