RSI, MACD & Moving Averages: What They Really Tell You (Easily Explained)

Welcome to VolaFi! In this article we will break down how RSI, MACD, and Moving Averages help you trade smarter. Let’s dive in.

Why These Indicators Matter

• Technical analysis: RSI, MACD, and Moving Averages are top tools traders rely on in order to analyse markets.

• Trend detection: These indicators show how strong the market is and where it may go.

1. MACD: Momentum via EMAs

MACD on Bitcoin chart on TradingView

• MACD = the difference between a 12‑period EMA & 26‑period EMA. A 9‑period EMA of the MACD line becomes the Signal line. Too hard? It consists of two lines (EMA, check the point 1 above) that go and based on their movements traders analyse.

• Buy signal: MACD line crosses above the signal line (middle line). Sell: it crosses below.

• When two lines overlapse a big movement is to be awaited

2. Moving Averages: Trend‑Smoothing Basics

MA on a Bitcoin Chart (9, 20, 200) on TradingView

• A moving average (MA) cleans (smooths) price data over time by reducing excessive noise and revealing the true trend (bullish/bearish).

• Two main types: SMA (Simple Moving Average) - made for longer period of time and EMA (Exponential Moving Average) - looked at recent prices.

3. RSI: Overbought & Oversold Perspective

RSI on Bitcoin chart on TradingView

• Relative Strength Index (RSI) is an index ranging from 0‑100—typically using 14‑period data.

• Above 70 → overbought (may go down). Below 30 → oversold (may go up).

• RSI being above 50 suggest bullish (ready to go up, happy) bias; below 50 indicate bearish (ready to go down, sad) sentiment.

How They Work Together

Indicator	Strength	Best for
Moving Average	Overall price direction	Trend direction
MACD	Confirms momentum shift	Trending markets
RSI	Detects if an asset is oversold or overbought	Possible reversals

• Use MA to see trend direction, MACD to find momentum entries, and RSI to spot if moves will reverse.

Limitations of these Indicators

• In sideways markets, RSI may give false overbought signals and MACD may lag or whipsaw.

• Moving Averages lag—they reflect history. Adjust MA lengths to fit your timeframe.

• Always pair indicators; none is perfect alone. Technical analysis is not everything in trading, but it helps.

When you have learned the rest of the technical analysis on our Blog page, you can check out the upcoming volatility causing events in cryptocurrency market on our website VolaFi.