Volume: the lie detector
Price tells you what; volume tells you how convincing.
- A breakout on high volume is more likely real.
- A breakout on low volume is suspect — often a fake-out.
- Rising price on falling volume = a move running out of fuel.
RSI: momentum in one number
The Relative Strength Index (0–100) measures how stretched a move is.
- > 70 = overbought, < 30 = oversold.
- But in strong trends RSI can stay pinned for a long time — don't short just because RSI hit 70.
The real power: divergence
When price makes a higher high but RSI makes a lower high, momentum is fading even as price rises — a bearish divergence (and the reverse for bullish). Divergences are early heads-ups, best used with support/resistance.
Keep it minimal
Two good indicators used well beat ten contradictory ones. Indicators confirm price — they don't replace it.