Technical indicators

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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 any stock detail page. Then, select the expand (two-arrow) button to open the advanced chart. There you can add, remove, and customize indicators. We’ll save your preferences and apply them to the advanced charts for other stocks.

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Which indicators does Robinhood offer?

We currently offer 7 indicators available in the app or on the web:

  • Volume
  • Moving Average (MA)
  • Exponential Moving Average (EMA)
  • Relative Strength Index (RSI)
  • Moving Average Convergence Divergence (MACD)
  • Volume-weighted average price (VWAP)
  • Bollinger Bands (BOLL)
Note

Indicators are calculated over a period, which is defined by a number of intervals. The length of an interval depends on the span of the chart. For example, on a 1-day chart, each interval equals 5 minutes. In this case, MA(8) averages the close price of each 5-minute interval over 40 minutes (8 x 5 minutes = 40 minutes).

Interval lengths for advanced charts:

  • In the 1-day (1D) chart, 1 interval is 5 minutes
  • In the 1-week (1W) chart, 1 interval is 10 minutes
  • In the 1-month (1M) chart, 1 interval is 1 hour
  • In the 3-month (3M) chart, 1 interval is 1 day
  • In the 1-year (1Y) chart, 1 interval is 1 day
  • In the 5-year (5Y) chart, 1 interval is 1 week
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What does each indicator show?

Volume shows how much of an asset has been traded over a time period (e.g., an hour, a day, a week). 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 two 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 two 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).

Note

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.

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Disclosures

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.

The information contained in advanced charts do not purport to present a complete picture of the financial position, activities, results, actions or future performance of any index, security, or asset. Any information provided is intended for educational purposes only and should not be considered investment advice or a recommendation of any security or investment strategy. Robinhood does not endorse or adopt any particular investment strategy or approach to evaluating individual securities or assets. While the information is deemed reliable, Robinhood makes no representations or warranties with respect to the accuracy or completeness of the information provided. All investments involve risk, including the possible loss of principal. Investors should consider their investment objectives and risks carefully before investing. Charts, including charts relating to your historic portfolio valuations or performance, or relating to past prices of specific securities, are provided for informational purposes only and should not be relied upon as an accurate or complete presentation of your portfolio value, gains or losses, or the value or financial position of any security. Charts are based on various data sources, which may include market data and other information provided by third party information providers. Robinhood does not make any representation or guarantee relating to the accuracy, timeliness, or completeness of charts or any information or data on which they are based. Without limitation, charts may not accurately take into account the impact of events relating to a specific security, for example corporate actions such as stock splits, dividends, mergers and acquisitions, or events relating to your account or portfolio such as charges, deposits, or withdrawals, and may in certain circumstances overstate or understate gains or losses. In the case of any securities transferred into your Robinhood account from a third party broker, any performance including charts will be calculated based on their market value as of the date Robinhood receives the securities from the other broker and may be different from the historical performance. Past performance is no guarantee of future results. With respect to your portfolio, please refer to your account statements for the relevant period that you receive on a regular basis from Robinhood.

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