Indicators are one of the most important and main tools of technical analysis. Given the positive experience of technical analysts in the use of indicators, some of them have always been of general interest to analysts.
Indicators are auxiliary diagrams in technical analysis that are drawn from the raw materials of technical analysis, ie price, time and volume and its combination with mathematical functions. In fact, simply by extracting information from price and time charts, indicators place them in specific mathematical functions that provide analysts with the output of this information process to make future decisions.

In analysis and decision making, priority is given to price charts and indicators are considered only as auxiliary charts.

It is better to explain a little more about this because it is one of the most important points that we must pay special attention to when using indicators. Consider pedestrian lanes on the floor, slowing down or even stopping as we approach them. In fact, these lines are the basis of our decisions while driving; There is also a traffic sign next to the pedestrian lanes that refers to this issue. But if pedestrian lanes are the basis of our decision-making, then why is it necessary to have a traffic sign next to it?
On some days when the weather is not good and the weather may be foggy or the road surface is not clearly visible, this sign can help us a lot.
Indicators, like the example above, are not the basis of our decision-making and only help us to make better decisions.
Types of indicators in terms of time signal
Indicators are divided into two categories in terms of time signal: leading and following (delay):

1. Leading Or Oscillator: These indicators have the ability to predict trend changes and sometimes show us the return levels and the break signal earlier than the price chart.
2. Lagging Or Trend Indicators: These indicators are of the delay type and are often placed on the price chart and confirm the return areas with a slight delay.
   The four main categories of indicators
   Indicators are divided into four main categories, each of which has its own unique characteristics.
   Three of them are in the form of public indicators and one is in the form of indicators created by investment market legend Bill Williams.
3. Trend indicators: These indicators are of the delay type and are usually created on the price chart and generally provide information to the analyst for analysis and decision making by averaging the price chart.
4. Oscillators: As their name suggests, they are oscillators and move in a certain range. Oscillators have the ability to check the strength of the trend, and if there is a weakness in the trend, it is somewhat visible in the oscillators. Another feature of oscillators is the study of market emotions, and when collective wisdom reacts to prices, the oscillators also react to this issue and greatly help the analyst to increase the quality of his analysis.
5. Volume: are a group of indicators that examine and evaluate the volume of transactions and its value. Trading volume in specific time frames has important meanings for analysts that the use of these indicators is influential in their decision making.
6. Bill Williams: The Bill Williams indicator set was designed by Mr. Williams himself and optimized by his daughter. Mathematical formulas, Fibonacci and reactive numbers have been used in the design of these indicators.

Familiarity with the concept of convergence and divergence
When the price chart and indicators behave inconsistently in changes, we see divergence, and if the price chart and indicators agree, we see convergence.
If there are signs of divergence in the indicators, it indicates a weakness in the trend and this can lead to a change in the trend.
If divergence is observed in the return areas, it can increase the probability of a return and is one of the positive news for analysts who have identified that return area.
Familiarity with some popular indicators
• MACD:
The McDee indicator is designed by Mr. Gerald Apple, which measures the strength and acceleration of the trend. This indicator consists of two moving averages called the sucker line and the signal line, the intersection of these two lines in certain situations gives signals to analysts that can be the basis for decision making.
• Relative Strength Index (RSI):
Undoubtedly, it is one of the most widely used indicators, which predicts the strength of the trend and its direction. This indicator is in the category of oscillators and is usually used for trading strategies of buying at the lowest price (over bought) and selling at the highest price (over sold).
Moving Average (MA / EMA):
The moving average is one of the indicators following the trend because by averaging past prices, it evaluates the average price in different periods. Generally, the moving average is calculated in two simple and exponential ways, which in the exponential calculation method will give more weight to the prices closer to the end of the period.
• Parabolic SAR:
This indicator was designed by Wells Wilder to detect sudden changes in trend

Identify and identify recurring areas. Like the moving average, the parabolic star follows the trend, except that it operates more optimally in terms of time signal. This indicator is very suitable for receiving trend reversal confirmation and it is very easy to work with.
• Stochastic:
Stochastic is undoubtedly the most popular indicator among oscillators and is widely used in volatile markets such as foreign exchange and futures markets. This indicator is very suitable for quick entry and exit of the stock and the deeper the market, the better this indicator will perform.

Experience has shown that indicators have a great impact on improving the quality of analysis; Therefore, we decide to provide a complete and more detailed explanation of each of the indicators in the future. Certainly, after learning how to use the indicators, the quality of your analysis will increase significantly compared to before.

technical analysis
Another popular indicator, along with the Makdi indicator, is the Relative Strength Index or RSI, which is widely used by analysts.

The Relative Strength Index is designed and developed by Wells Wilder, which is a family of oscillators and, like the MacDaE indicator, uses a moving average in its calculations, in which the calculation period is variable, which by default And the standard is 14 days. This indicator is an indicator to study the market momentum (trend) and its momentum, which some sources consider as a leading indicator, but due to the oscillating nature of this indicator, it is better to consider it in the family of delay indicators.

What is the market trend (Momentum)?
Momentum is a concept in physics that examines the power and acceleration of a moving object. In fact, the momentum states that a moving object has the ability to continue in the same direction until a foreign object blocks its movement or changes its direction.

Momentum = mass * velocity
In the picture above we see a very good example of the concept of momentum; Bullets infuse each other with momentum, and these momentum continue to move until an external force prevents them from moving or discharges their energy.
Let us give the same example of RSI and the capital market; Prices are always moving in a certain direction and follow their trend until an external force changes direction. This issue is also related to the principle of trends in technical analysis and states that past trends may continue for a certain period of the future.
The Relative Strength Index examines the buying and selling power of a trading option by examining a specific time period, which is a standard 14-day period, and shows it in a chart with three different intervals. As mentioned, RSI is an oscillator and it oscillates between two levels of 0 to 100.
Also in between, very important levels are defined that level 0 to 30 is registered as the sales saturation area and level 70 to 100 as the buy saturation area.

Sales saturation zone and purchase saturation zone
In the above explanations, we mentioned that power and acceleration in a certain direction will change direction with the arrival of an external force or with the discharge of energy. In the RSI indicator, there are two areas called buying saturation and selling saturation, which indicates the slowdown and the end of extreme trades. In other words, when we reach the area below 30 in the RSI indicator, we gradually see a decrease in extreme sales in the market and the purchasing power in the market will probably increase, and when we are in the area above 70, the extreme purchases are probably over and we expect To reduce the pressure of buyers and see a strong supply in the market.
How to get the right signal from RSI?
We got acquainted with the RSI indicator and checked its levels. We have described two very important levels that are exactly the basis of the RSI signal and play an important role in this indicator.

Purchase signal: Sometimes in the market, we see the unattractive price for buyers and also the haste of sellers, in which case there is a situation where extreme sales occur in the market and with a large volume. Under these conditions, the RSI chart breaks the level 30 over time and shows an index below 30.
After the fluctuations of the RSI index below the level of 30, the extreme sales will weaken over time, and conditions will arise that the buyers’ desire to enter the market will increase again; Under these conditions, the RSI will start to rise and will issue a buy signal when the 30 level is broken from the bottom up.
Sales signal: Increased demand and the entry of heavy liquidity into the market will gradually increase prices, and this trend will continue as long as prices are attractive to buyers. Rising prices and declining extreme purchases create a situation called saturation, in which case the big capital giant will gradually sell, and lower prices will become more attractive as buyers in the market decline. They say that this will reduce the price of the investment option. In this case, the RSI index will begin to decline in the buy saturation area (above 70) and the failure of the 70 level will not be good news for the holders of this stock, which means the high desire of investors to sell more.
Divergence in RSI
This indicator is one of the best indicators for detecting divergence, and if they agree with Makdi on the weakness in the trend, we should most likely see a price return. Divergence in RSI occurs when we see a mismatch between the price chart and the RSI chart, in which case we see a weakness in the trend that may completely change the direction of price movement.
Trend line on RSI chart
One of the techniques used by some analysts is the technique of drawing the trend line on the RSI indicator, in which case they receive signals from the return areas or the break of the trend line.

What is an MFI indicator?
The Money Flow Index is a family of oscillators that shows the inflow or outflow of liquidity into the market in the form of an index. But what is the importance of examining the inflow and outflow of liquidity into the market?
According to economic theory of money supply, when the money supply in the market increases, the purchasing power will also increase in parallel, and as a result, sellers will not be willing to offer their assets at a low price. The unattractiveness of low prices for sellers, as well as the increase in demand from buyers, causes prices to rise, and as long as prices do not satisfy sellers, we will see an upward trend. This is also true in reverse; When liquidity leaves the market, demand in the market will naturally fall, and this will cause prices to fall.
We now examine this theory in the capital market; When an investment option is considered by market participants, over time a large amount of money will enter the market and prices will gradually rise. Withdrawal of money from the market can also create the opposite situation and ultimately lead to lower prices.

How to calculate the MFI indicator
The MFI indicator is very similar to the RSI indicator, except that the trading volume is also included in the MFI calculations. Some analysts believe that the MFI is exactly the same as the RSI indicator, except that the volume is also included in its calculations. The calculations of the MFI indicator are very simple and first the closed price (Close) is added to the highest and lowest price (High & Low) and will be divided into three, which is the result of the so-called typical price.

In the second step, the cash flow is calculated; Liquidity inflows are divided into three categories: positive inflows, negative inflows and neutral inflows:

1. Positive cash flow: When the typical price is higher than yesterday’s price, in this case the cash flow is positive.
2. Negative cash flow: When the typical price is lower than yesterday’s price, in this case the cash flow is negative.
3. Neutral liquidity flow: When the typical price has not changed compared to the previous day, in this case, it is in a neutral state.

In the third step, the liquidity ratio will be calculated and this ratio will be obtained by dividing the cash flow from positive to negative.

Now all the data needed to calculate the MFI has been completed and we can easily calculate the liquidity flow index based on the following formula. Of course, it is emphasized that technical analysts have no need to calculate the MFI, and only to teach and better understand the subject, how to calculate it has been taught.

MFI indicator signal
The MFI indicator is very similar to the RSI. This indicator, like the RSI, fluctuates in the range of 0 to 100, and the two levels of 20 and 80 are the most important levels of this indicator. Zones above 80 are designated as the saturation zone for liquidity entering the market and zones below 30 are designated as the saturation zone for liquidity outflows.

MFI Indicator Sales Signal:
When the cash flow enters the market, the MFI chart index starts to grow and after passing the level of 80, it enters the saturation zone of liquidity inflow. Over time and as prices rise, the necessary incentives are created among suppliers, and over time we will see increased sales and liquidity out of the market. The sell sign will be highlighted when the MFI chart exits the saturated liquidity inflow area and breaks the 80 level from top to bottom. In this case, due to the outflow of liquidity, we will probably see the beginning of a downward movement in prices.

MFI indicator buy signal:
Increasing relentless sales and outflow of liquidity from the market over time reduces prices. Due to falling prices and rising value, the necessary incentive will be created among investors, and over time we will see the entry of liquidity in the market, which will lead to the movement of the MFI chart from the saturation of liquidity outflow to the equilibrium. So when level 20 is broken by the MFI line from the bottom up, we can consider it as a buy signal.
Divergence and convergence in MFI:
One of the positive features of the MFI indicator is the possibility of examining weakness in the process. This indicator, like the RSI, has a relatively high accuracy in detecting divergences at the bottom and peaks. Given the importance of examining divergence in indicators, MFI can be a great help in identifying trend strengths.

The tool of choice of many analysts, which at the same time has a brilliant performance, which is evidenced by the widespread use of suckers among capital market participants.
Moving Average Convergence Divergence was designed by Gerald Apple, an American physicist and researcher in the late 1970s. McDee is in the family of oscillators and in recent years has been one of the most widely used indicators among analysts.
As the name implies, the moving average is used in the calculations of this indicator, so unlike some oscillators, it does not have a complex calculation formula.
What components does Mackdi include?
This indicator includes two moving averages called “suction line” and “signal line”, which are given more weight in the calculation of the suction average at prices closer to the last trading days. The suction line has a fast and oscillating feature, but the signal line is very slow and low turbulence, which is the reason for the difference between the average of the suction line and the signal line.
The third component is the suction histogram, which shows the difference between the suction line and the signal line in the form of vertical lines.
Before we get into the details of Macdi, it is better to look at the pictures carefully. Considering that the Macdi indicator has two different appearances and is used by analysts with the names of classic Macdi and Macdi, we decided to introduce both indicators to you.
Keep in mind that the performance of both is the same and only differ in appearance that you can choose one of your choice and use it.

Familiarity with Macdi calculations
The McDean line, or McDeline, as a fluctuating and fast line, is always moving with the signal line, which sometimes intersects with each other, which in this case and in certain circumstances provide important signals to analysts.
On the other hand, the movements of the suction line, considering the following of the price chart, form pivots, which also issue other important signals in examining the coordination or inconsistency of the behavior of the price chart and the suction line.
Calculating the suction line is very simple and knowing how to calculate the suction line allows you to optimize the indicator based on the behavior of the chart you want to receive better signals. In calculating the suction line, we need two moving averages of EMA or exponential type:
• First, we calculate the average of 12 price periods.
• Then we calculate the exponential average of 26 periods.
• Demand represents an average of 12 periods out of an average of 26 periods on our sucker line.
MACD = [Price, 12 Period] EMA – [Price, 26 Period] EMA

But how is the signal line calculated? The calculations of this line are directly related to the suction line, in fact, the signal line is the average 9-day exponential line of the suction line.
Signal = [MACD, 9] EMA

The third component of the sucker is its histogram, which in the classical sucker indicator indicates the difference between the sucker line and the signal line. In fact, when the sucker line and the signal line are very different from each other, the histogram will be large, and when the two are close or equal, the histogram will be smaller or even become a line. In the new Macdi indicator, the histogram is the same Macdi line that was explained in the pictures above.

Macdi indicator signal
As mentioned, the sucker signal is output from the intersection of the sucker line and the signal line. A buy signal is issued when the suction line (blue line) crosses the signal line (red hazard) from the bottom to the bottom. Also, when the suction line (blue line) crosses the signal line (red danger) from the top to the top from zero, then the sell signal will be issued.
It should be noted that the intersection of the suction line and the signal line in the mentioned areas and with the above characteristics are considered as a signal and the absence of any of the above violates the suction signal.

Divergence and convergence in Macdi
As the name McDee suggests, one of its applications is to study divergence and convergence, which is important to analysts. If you are unfamiliar with the concept of divergence and convergence, we recommend that you read the convergence and divergence training carefully once.
One of the positive features of Macdi is that it provides the best possible divergence signal. If we compare the family of oscillators, we will find that McDee is very smart in detecting the weakness of the trend, and according to Gerald Apple, it is the best indicator to measure the strength of the trend.
Positive and negative characteristics of Macdi
Given that McDee is one of the most widely used indicators, it can be concluded that its consideration was probably not unreasonable.
In addition to simplicity, McDee has the ability to simultaneously examine the strength of the trend and the strength of the return, which has made its positive features popular among indicators. In addition to these positive features, Macdi, like other indicators, has a slight delay, which we explained in detail in the article on indicators.