Use an indicator to answer one question your plan has already asked, and read the answer as one condition, never a signal. Every indicator here is a calculation on prices or volume that have already printed. It can support a read you made from structure by meeting a condition the plan wrote. It cannot tell you what price does next. A rule you wrote can tell you when to act, and the reading itself forecasts nothing.
The table lists each indicator, its common setting, the question it answers, what it cannot tell you and the page that explains it. Where the setting is this manual's choice and not a published default, the row says so.
| Indicator and setting | The question it answers | What it cannot tell you | Page |
|---|---|---|---|
| RSI(14) with Wilder smoothing, bands at 70 and 30 (published default) | Is momentum confirming this swing, or disagreeing with it? | Which way price goes next. A trend can print divergence repeatedly, and RSI is built from closes, so it does not record a wick's extreme. | RSI divergence: the formula, regular and hidden divergence |
| MACD(12, 26, 9) (published default) | Is the gap between a fast and a slow average widening or closing? | Future price direction. It is built from averages of past closes, and it flips around zero in a range. | MACD: the MACD line, signal line and histogram |
| EMA 20, 55 and 200 (this manual's choices) | Is price above or below a reference line, and is the line rising? | What price does next. In a steady constant-rate trend the line lags by about half its length, 27 candles for the 55 EMA. | Moving averages: simple versus exponential, and why 55 |
| ATR(14), Wilder smoothing (published default) | How big are candles on this chart, in price units? | Direction, or the size of the next candle. After a shock candle it can understate what just happened. | ATR: true range and the stop buffer |
| Chandelier Exit (22, 3) (published default) | Has price moved against the trend by more than a multiple of its normal candle size, measured from the recent extreme? | Where the trend goes. A close through the line comes after part of the move is gone, and a setting fitted to the last move may not fit the next. | Chandelier Exit: the formula and the trailing rule |
| Supertrend (10, 3) (common charting default) | Has a candle closed through a line that trails the recent midpoints by a multiple of ATR? | Where the trend goes. It flips late and repeatedly in a range. | Supertrend: the bands and the flip |
| Volatility, for example ATR as a percent of price | How big are candles on this coin compared with another, and how wide in price is a stop buffer of a chosen ATR multiple? | Whether volatility continues, or direction. | Volatility: measuring it and sizing from it |
| Volume | Did the candle that crossed a level trade more or less than its own recent average, on the contract you trade? | Whether a move continues, or whether the reported figure is real. It does not identify who was buying or selling, and units and totals differ by exchange and between spot and perpetual. | Volume: what it confirms and what it cannot |
Using the table
Three habits keep an indicator in its place.
- Write the question before you open the indicator. "Is momentum fading into this high?" is a question. "What does RSI say?" is not. A condition the plan can state, such as "RSI(14) at the second peak is lower than at the first", can be checked, and it can fail.
- Count reasons, not indicators. RSI and MACD are both built from the same closing prices, so their agreement is weaker evidence than two unrelated reasons. The Chandelier Exit and Supertrend both trail price by a multiple of ATR, so read their agreement the same way. A level on the chart, an indicator condition and a higher-timeframe trend are three different kinds of reason.
- Say whether a setting is a default or a choice. A published default is a starting point that other traders also see. A setting fitted to the last move may not fit the next one. Write the setting in the plan and keep it across the charts you compare.
What is not on the table
Fibonacci lines, wave counts and breakout rules are chart methods, not indicators, and each has its own page. Fibonacci retracement and Elliott Wave are optional and discretionary: two careful traders can draw or count the same chart differently. Breakouts and retests sets out what makes a close through a level count.
An indicator condition goes into the conditional plan, step 3 of the decision cycle, with the invalidation named beside it. Before relying on a combination, testing a setup sets out the evidence standard: rules written first, charts held back and costs netted out. This manual cites no test showing that any indicator on this table predicts direction.