Technical analysis is the study of price and volume data to forecast future moves. Two of the most widely used indicators on Wall Street are the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). These aren't crystal balls — they're tools that help you read momentum and identify when a trend might be running out of steam or about to accelerate. Every professional trading desk has these on their screens. Learning to read them puts you ahead of the majority of retail traders who buy and sell based on emotion and headlines.

RSI measures the speed and magnitude of recent price changes on a scale from 0 to 100. The standard setting uses 14 periods (14 days on a daily chart). An RSI above 70 is considered 'overbought' — meaning the stock has run up fast and might be due for a pullback. An RSI below 30 is 'oversold' — meaning selling has been aggressive and the stock might bounce. But here's what separates beginners from intermediate traders: overbought doesn't mean 'sell immediately' and oversold doesn't mean 'buy immediately.' In a strong uptrend, RSI can stay above 70 for weeks. The real signal is divergence — when the stock makes a new high but RSI makes a lower high, momentum is weakening even though price is still rising. That divergence often precedes a reversal.

MACD tracks the relationship between two moving averages of price — typically the 12-period and 26-period exponential moving averages (EMAs). The MACD line is the difference between these two EMAs. A signal line (the 9-period EMA of the MACD line) acts as a trigger. When the MACD line crosses above the signal line, that's a bullish crossover — momentum is shifting up. When it crosses below, that's bearish. The MACD histogram (the bars you see on the chart) shows the distance between the MACD and signal lines. Growing histogram bars mean momentum is increasing; shrinking bars mean it's fading. Like RSI, MACD divergence from price is one of the most reliable signals — if the stock is making new highs but MACD is trending down, watch out.

The real power comes from using RSI and MACD together, not in isolation. If a stock is in an uptrend, RSI pulls back to the 40-50 range (not oversold, but momentum has cooled), and MACD is about to make a bullish crossover — that's a high-probability entry point. If RSI divergence is showing weakness AND MACD is rolling over, that's a strong warning to take profits or tighten your stop loss. No indicator works 100% of the time. False signals happen. That's why you never rely on a single indicator — you build a case with multiple signals confirming the same thesis. Think of it like a court case: one piece of evidence is interesting, but three pieces pointing the same direction is convincing.