Technical indicators
Basic stock charts can give you a good idea about how a financial asset has performed. But many analysts try to gain an edge by looking deeper, using technical indicators. Unlike fundamental analysis, which tries to determine the value of the business, technical analysis uses price, volume, and open interest data. Indicators turn this data into visuals using mathematical formulas. Analysts track these visuals to help identify trends and find opportunities to enter or exit positions.
To access technical indicators, go to the detail page for a stock, ETF, or crypto. Then open the Advanced chart view (two-arrow or expand icon) where you can add, remove, and customize its indicators. We’ll save your preferences and apply them to the advanced charts for viewing other stocks or crypto.
We currently don’t offer volume-related indicators for crypto charts. So depending on the chart and asset type, one or more of the following indicators may be available:
Interval lengths depend on the selected time span, the chart view, and what you’re viewing it for (stock, ETF, or crypto). Indicators are calculated over the selected time span.
On a 1D (1-day) chart, each interval equals 5 minutes. For this example, the MA(8) averages the close price of each 5-minute interval over 40 minutes (8 x 5 minutes = 40 minutes).
Volume shows how much of an asset has been traded over a time period (e.g., an hour, a day, a week). For the candlestick view, each time period has a corresponding bar. The length of the bar will indicate the volume traded. A green bar shows a price increase during the period, and a red bar shows a price decrease.
Analysts generally use volume to gauge whether recent price swings are likely to be brief or part of a larger trend. High volumes may indicate that a movement in price is significant, while low volumes may indicate that a movement in price is insignificant.
Moving average (MA) shows the average closing price over a time period. For example, any given point on a 20-day moving average shows the average of all closing prices from the previous 20 days.
Analysts generally use MA to smooth out price data. It can also help reduce the impact of short-term price fluctuations. By comparing MAs for different time periods, analysts may be able to identify price trends over time.
Exponential moving average (EMA) is similar to the moving average (MA). Both show the average closing price over a time period. However, unlike MA, EMA places more weight on recent data. Because of this, it reacts faster to sudden price swings.
Analysts generally compare EMAs for different time periods to help determine whether price trends will continue. EMA is considered more sensitive than MA, and is generally favored among short-term analysts.
Relative strength index (RSI) is a momentum indicator, represented as a number between 0 and 100. This means that it analyzes the rate at which prices rise and fall. Specifically, RSI uses the magnitude of recent changes in price to evaluate whether an asset is overbought or oversold. Analysts generally consider an asset overbought if its RSI is above 70, and oversold if its RSI is below 30.
Our RSI uses Wilder’s smoothing, which helps filter out price fluctuations to make it easier to spot trends. Instead of comparing prices to the moving average (MA), Wilder’s smoothing uses the exponential moving average (EMA).
Moving average convergence divergence (MACD) is a momentum indicator, like RSI. It shows the difference between 2 exponential moving averages (EMAs): one short-term (the fast EMA), and one long-term (the slow EMA). This difference is plotted against a signal line, which is usually the 9-day EMA.
Analysts generally become bullish if the MACD crosses above the signal line, and bearish if it crosses below.
Volume-weighted average price (VWAP) shows the average price over a time period, adjusting for volume. Periods with higher trading volume will impact VWAP more than periods with lower trading volume.
Analysts generally consider an asset undervalued if the price is below VWAP, and overvalued if the price is above VWAP.
Bollinger Bands (BOLL) creates 2 bands around a moving average (MA). Each is usually 2 standard deviations away from the MA.
Analysts may use BOLL to help determine whether an asset is undervalued (closer to the lower band) or overvalued (closer to the upper band).
Robinhood uses Nasdaq Last Sale to provide real-time last sale prices. Nasdaq is one of the most widely used sources for real-time market data. Learn more about how Robinhood uses market data.
Keep in mind that technical analysis is only one approach to analyzing financial assets. When considering which assets to buy, sell or hold, customers should use the approach that they’re most comfortable with. Past performance is no guarantee of future results.
Nasdaq and Robinhood Markets Inc. are unaffiliated entities.
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