Indicators, explained once
The measures used in market analysis, written plainly: what each one actually measures, and where it stops being useful.
Many arguments about technical indicators are not really about the indicator. They are about which of two incompatible ideas the person is using to read it: momentum, which says a move in motion tends to continue, or mean reversion, which says a move away from the average tends to snap back. The confusion that readers report with RSI, moving averages or volume spikes often comes from applying both ideas to the same chart without noticing the switch.
Average True Range measures how far a stock moves in a day, not which way it moves. That distinction matters: ATR is a volatility reading, not a trading signal. ATR tells you the size of a stock's typical swing. What you do with that information is a separate question.
A single candle on a chart shows you four numbers: the open, the high, the low and the close. That is all it shows. It does not tell you why the price moved, who was buying, or whether the move will continue. Treating one candle's shape as a signal on its own is closer to reading tea leaves than to reading a market, and the shape only starts to mean something once you put volume and the surrounding trend next to it.
It is tempting to read a touch of the upper Bollinger Band as "overbought" and a touch of the lower band as "oversold". That reading treats the bands as a directional signal. They are not built for that job. They are built to measure how much a price is moving, not which way it is going next.
Support and resistance levels get treated on Nigerian and South African trading forums as if they were fixed rules of physics: price hits ₦45 and bounces, so ₦45 is "support", full stop. That treatment is wrong, and it costs people money. A support or resistance level is a record of where buyers or sellers showed up in the past. It is a description, not a boundary drawn by a regulator or an exchange. Treating it as exact, down to the naira or the kobo, misreads what the chart is actually telling you.
MACD is easy to misread. "The MACD" sounds like one line, but it is built from three separate readings that each say something different. Get clear on what each one measures, and you stop treating a lagging signal as if it were a leading one.
Look at a price chart and you're looking at where a stock's last trade happened. That's all a price line tells you: the most recent number, nothing about how much conviction sat behind it. Volume at price fixes that blind spot. Instead of asking "what did it trade at just now," it asks "how much actually traded at each price level over time." Those are two different questions, and the second one tells you far more about what a stock's owners actually believe.
RSI measures speed, not direction. It compares the size of recent gains to the size of recent losses and turns that into a number between 0 and 100, nothing more mystical than that. A stock climbing fast on strong up days will push RSI high. A stock getting hammered will push it low. That's the whole calculation. It tells you how hot or cold the recent move has been, not where the price is going next.
A moving average doesn't forecast where a stock is headed next. It flattens the daily wobble in a price chart so the underlying trend is easier to read. That's its entire job, nothing more. On its own it tells you nothing about tomorrow's close; it tells you where price has already been, averaged out over a fixed stretch of trading days. Strip away that distinction and most other mistakes traders make with moving averages follow from it.