Technical Indicator Reference Guide

Comprehensive guide to all 29 technical indicators used in the crypto-ta-analyzer skill.

New Indicators (v2)
Trend Indicators
Momentum Indicators
Volume Indicators
Volatility Indicators
Divergence Detection
Scoring System

New Indicators (v2)

Bollinger Bands (BB)

Weight: 1.0 Parameters: period=20, std_dev=2.0, squeeze_threshold=5.0

Volatility-based bands around a moving average. Key components:

Middle Band: 20-period SMA
Upper Band: Middle + 2σ (standard deviations)
Lower Band: Middle - 2σ
Bandwidth: (Upper - Lower) / Middle * 100
%B: (Price - Lower) / (Upper - Lower) — position within bands

Signals:

In RANGING markets: Mean reversion (buy at lower band, sell at upper)
In TRENDING markets: Breakout continuation (riding bands is bullish/bearish)
Squeeze Detection: When bandwidth < threshold for 6+ bars, low volatility may precede breakout

On-Balance Volume (OBV)

Weight: 1.0 Parameters: signal_period=20

Cumulative volume indicator that adds volume on up days, subtracts on down days. Formula: OBV = prev_OBV ± volume (based on close vs prev_close)

Signals:

OBV above signal line = bullish
OBV crossing above signal = buy trigger
Divergence: OBV diverging from price often precedes reversals (volume leads price)

Ichimoku Cloud

Weight: 1.0 Parameters: tenkan=10, kijun=30, senkou_b=60 (crypto-optimized)

Multi-component Japanese trend system. Components:

Tenkan-sen (Conversion): (10-period high + low) / 2
Kijun-sen (Base): (30-period high + low) / 2
Senkou Span A: (Tenkan + Kijun) / 2, shifted forward
Senkou Span B: (60-period high + low) / 2, shifted forward
Cloud (Kumo): Area between Senkou A and B

Signals:

Price above cloud = bullish, below = bearish, inside = neutral
Tenkan above Kijun = bullish cross
Cloud color (A > B = green/bullish)

VWAP (Volume Weighted Average Price)

Weight: 0.5

Institutional benchmark price. Formula: Cumulative(TP * Volume) / Cumulative(Volume)

Signals:

Price above VWAP = bullish bias
Price below VWAP = bearish bias
Used by institutions for execution benchmarks

ATR Signal

Weight: 0.5 Parameters: period=14

ATR (Average True Range) exposed as a signal indicator for volatility-based trading.

Signals:

Low volatility (ATR contraction) = potential breakout setup
High volatility + trending = trend confirmation
Combines with regime detection for context-aware signals

Trend Indicators

SMA (Simple Moving Average)

Weight: 1.0
Timeframes: 20-period (short), 50-period (long)

Crossover strategy - bullish when short crosses above long, bearish when crosses below.

EMA (Exponential Moving Average)

Weight: 1.0
Timeframes: 12-period (short), 26-period (long)

More responsive than SMA due to exponential weighting of recent prices.

DEMA (Double Exponential Moving Average)

Weight: 1.0
Timeframe: 30-period

Reduces lag compared to SMA/EMA by double smoothing.

TRIMA (Triangular Moving Average)

Weight: 0.5
Timeframe: 30-period

Gives more weight to middle portion of data, smoother than SMA.

WMA (Weighted Moving Average)

Weight: 0.5
Timeframe: 30-period

Linear weighting with most recent data weighted highest.

KAMA (Kaufman Adaptive Moving Average)

Weight: 0.5
Timeframe: 30-period

Adapts to market volatility - fast in trending markets, slow in ranging.

T3 (Tillson T3)

Weight: 0.5
Timeframe: 5-period

Smooth moving average with reduced lag and overshooting.

TRIX (Triple Exponential Moving Average)

Weight: 0.5
Timeframe: 30-period

Triple smoothed to filter out insignificant price movements.

MESA (MESA Adaptive Moving Average)

Weight: 1.0
Parameters: fastlimit=0.5, slowlimit=0.05

Adaptive indicator that adjusts to current market cycle period.

Parabolic SAR

Weight: 1.0
Parameters: acceleration=0.02, maximum=0.2

Stop and Reverse system - dots above price suggest downtrend, below suggests uptrend.

Momentum Indicators

RSI (Relative Strength Index)

Weight: 1.0
Timeframe: 14-period
Thresholds: Oversold <30, Overbought >70

Measures speed and magnitude of price changes. Classic overbought/oversold indicator.

MACD (Moving Average Convergence Divergence)

Weight: 1.0
Parameters: fast=12, slow=26, signal=9

Trend-following momentum indicator showing relationship between two EMAs.

MOM (Momentum)

Weight: 0.5
Timeframe: 10-period

Simple rate of price change measurement.

ROC (Rate of Change)

Weight: 0.5
Timeframe: 10-period

Percentage change in price over specified period.

CMO (Chande Momentum Oscillator)

Weight: 0.5
Timeframe: 14-period
Thresholds: Overbought >50, Oversold <-50

Modified RSI using sum of gains/losses rather than averages.

PPO (Percentage Price Oscillator)

Weight: 0.5
Parameters: fast=12, slow=26

MACD expressed in percentage terms for easier comparison across securities.

APO (Absolute Price Oscillator)

Weight: 1.0
Parameters: fast=12, slow=26

Difference between two moving averages expressed in absolute terms.

CCI (Commodity Channel Index)

Weight: 1.0
Timeframe: 14-period
Thresholds: Overbought >100, Oversold <-100

Identifies cyclical trends - how far price deviates from average.

AROON

Weight: 1.0
Timeframe: 14-period
Thresholds: Strong trend >70

Two lines (up/down) identify trend presence and direction.

KDJ (Stochastic with J line)

Weight: 1.0
Parameters: K=9, D=3, J=3K-2D
Thresholds: Oversold <20, Overbought >80

Enhanced stochastic with J line for earlier signals.

Volume Indicators

MFI (Money Flow Index)

Weight: 1.0
Timeframe: 14-period
Thresholds: Oversold <20, Overbought >80

Volume-weighted RSI - incorporates both price and volume.

Directional Indicators

ADX (Average Directional Index)

Weight: 0.5
Timeframe: 14-period
Threshold: Strong trend >25

Measures trend strength regardless of direction.

DMI (Directional Movement Index)

Weight: 0.5
Timeframe: 14-period

Component of ADX - +DI and -DI lines show directional movement.

Divergence Detection

Divergences occur when price and indicator move in opposite directions, often signaling reversals.

Types of Divergence

Regular Bullish Divergence:

Price makes lower low
Indicator makes higher low
Signal: Potential reversal upward

Regular Bearish Divergence:

Price makes higher high
Indicator makes lower high
Signal: Potential reversal downward

Hidden Bullish Divergence:

Price makes higher low
Indicator makes lower low
Signal: Trend continuation in uptrend

Hidden Bearish Divergence:

Price makes lower high
Indicator makes higher high
Signal: Trend continuation in downtrend

Indicators with Divergence Detection

RSI: Most common divergence indicator
MACD Histogram: Reliable for momentum divergences
OBV: Most reliable — volume precedes price

Divergence Confidence Ranking

OBV divergence: Highest reliability (volume leads price)
RSI divergence: High reliability on longer timeframes
MACD divergence: Good for momentum shifts

Scoring System

Score Weights (Updated v2)

Each indicator contributes to the total score based on its signal:

Core (1.0): RSI, MACD, BB, OBV, ICHIMOKU, EMA, SMA, MFI, KDJ, SAR Strong (0.75): DEMA, MESA, CCI, AROON, APO Supporting (0.5): ADX, DMI, CMO, KAMA, MOMI, PPO, ROC, TRIMA, TRIX, T3, WMA, VWAP, ATR_SIGNAL, CAD

7-Tier Signal System (NEW)

STRONG_BUY: Normalized score >= 0.5, confidence >= 0.7 BUY: Normalized score >= 0.35, confidence >= 0.5 WEAK_BUY: Normalized score >= 0.2 NEUTRAL: -0.2 < normalized < 0.2 WEAK_SELL: Normalized score <= -0.2 SELL: Normalized score <= -0.35, confidence >= 0.5 STRONG_SELL: Normalized score <= -0.5, confidence >= 0.7

Legacy Interpretation (backward compatible)

Total Score >= 7.0: STRONG UPTREND Total Score 3.0 - 6.9: NEUTRAL Total Score < 3.0: DOWNTREND

Confidence Calculation

Confidence is computed from multiple factors:

Alignment (30%): How much indicators agree
ADX Score (20%): Trend strength
Coverage (15%): % of indicators computed
Volume Confirmation (15%): OBV/MFI agreement
Divergence Penalty (10%): Lower if divergences detected
Volatility Adjustment (10%): Lower in extreme volatility

Volume Confirmation

New factor that measures if volume supports price direction:

OBV trend matching price trend = +1.0
MFI agreeing with price direction = +0.5 to +1.0
No OBV divergence = +0.8

Best Practices

Never trade on single indicator - the scoring system's strength is in consensus
Watch divergences - especially OBV divergences (volume leads price)
Monitor BB squeeze - low volatility often precedes breakouts
Use Ichimoku cloud - price position vs cloud is strong trend filter
Check volume confirmation - ensure volume supports the signal
Consider market regime - trending vs ranging affects indicator reliability

High Conviction Setups

Strong Buy Setup:

7-tier: STRONG_BUY or BUY
Confidence >= 0.7
Price above Ichimoku cloud
OBV confirms (no bearish divergence)
No BB squeeze (or just breaking out of squeeze)

Breakout Setup:

BB squeeze detected
ADX rising from < 20
Watch for band expansion with volume

Reversal Warning:

Bearish divergence on RSI/MACD/OBV
Price at upper BB (%B > 1.0)
RSI > 70 or MFI > 80

Limitations and Considerations

Lagging nature: Most indicators are calculated from past data
False signals: Can generate whipsaws in choppy markets
Market regime changes: What works in trends may fail in ranges
Divergences: Not all divergences lead to reversals
OHLC approximation: Price-only data sources approximate high/low

Recommended Minimum Data

Absolute minimum: 50 data points
Recommended: 100+ data points for reliable signals
Optimal: 200+ data points for comprehensive analysis
Ichimoku: Requires 60+ bars for full cloud calculation

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