Top Technical Indicators Used by US Stock Market Traders

For many traders in the US stock market, technical analysis is more important than fundamental analysis (i.e., earnings, dividends, management, etc.). This is especially true for day and swing traders who depend on price trends, momentum, etc., to make their decisions rather than company fundamentals.

Both professional and retail traders utilize technical indicators to help identify trading opportunities, manage their risk, and better time their entries and exits.

While thousands of technical indicators are available to users (including many that aren't as widely known), the average person can be intimidated or confused when attempting to select from the many different types of technical indicators. This guide will introduce you to the most popular technical indicators that US stock market traders use and explain why these indicators are so important and how they are being applied in the real-world trading environment.

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What Are Technical Indicators?

Technical indicators are mathematical calculations based on price, volume, or volatility. They help traders analyze market behavior and make informed decisions without relying solely on news or emotions.

In the US market, technical indicators are widely used for:

• Identifying trends
  
  

• Spotting entry and exit points
  
  

• Measuring momentum
  
  

• Managing risk
  
  

Understanding the best stock indicators is essential for anyone involved in day trading, swing trading, intraday trading, or options trading

Moving Averages (MA)

Moving averages are among the most widely used and trusted indicators in the US stock market. They smooth out price fluctuations and help traders identify the overall trend.

The most common moving averages include:

• Simple Moving Average (SMA)
  
  

• Exponential Moving Average (EMA)
  
  

Short-term traders often use 9, 20, or 50-period moving averages, while long-term traders rely on 100 or 200-period averages. Moving averages are considered one of the best technical indicators for day trading because they clearly show trend direction and dynamic support or resistance.

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Relative Strength Index (RSI)

The Relative Strength Index (RSI) measures momentum and identifies overbought or oversold conditions.

RSI ranges between 0 and 100:

• Above 70 indicates overbought conditions
  
  

• Below 30 indicates oversold conditions
  
  

US traders frequently use RSI as the best indicator for intraday trading, especially when combined with price action. RSI is also popular as the best technical indicator for option trading, helping traders time entries when volatility and momentum align.

Moving Average Convergence Divergence (MACD)

MACD is a trend-following momentum indicator that shows the relationship between two moving averages.

It consists of:

• MACD line
  
  

• Signal line
  
  

• Histogram
  
  

MACD helps traders identify trend changes, momentum shifts, and potential reversals. It is considered one of the best stock indicators for swing traders and position traders in the US market.

Bollinger Bands

Bollinger Bands measure market volatility and consist of:

• A middle moving average
  
  

• An upper band
  
  

• A lower band
  
  

When price touches the upper band, the market may be overbought. When it touches the lower band, it may be oversold. US traders use Bollinger Bands as the best indicator for intraday, especially during volatile sessions and earnings-driven moves.

Top Technical Indicators Every Beginner Trader Should Understand

Volume Indicator

Volume is a very valuable tool; however, it is often overlooked when used to indicate a strength of price.

When price increases along with an increase in volume, it indicates that there is a strong trend underway, whereas an increase in price with a decrease in volume indicates the lack of strength in price movement and a weak trend. Volume plays an important role in confirming breaks in resistance, reversals in trends and trends continuing.

Professional traders believe that volume is one of the best indicators for all traders, independent of the market and time frame in which they trade.

VWAP (Volume Weighted Average Price)

VWAP is heavily used by institutional traders in the US stock market. It shows the average price a stock has traded at throughout the day based on volume.

VWAP is especially popular as the best indicator for intraday trading because it helps traders identify fair value zones. Stocks trading above VWAP are considered bullish, while those below VWAP are considered bearish.

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Stochastic Oscillator

The Stochastic Oscillator compares a stock’s closing price to its price range over a specific period.

It is commonly used to:

• Identify overbought and oversold conditions
  
  

• Spot momentum reversals
  
  

Many traders consider it among the top 20 trading indicators, especially for short-term trading strategies.

Average True Range (ATR)

ATR measures market volatility rather than direction. It tells traders how much a stock typically moves within a given period.

ATR is extremely useful for:

• Setting stop-loss levels
  
  

• Managing position size
  
  

• Understanding intraday volatility
  
  

US traders rely on ATR to avoid unrealistic targets and poor risk management.

Fibonacci Retracement

Fibonacci retracement levels help traders identify potential support and resistance zones.

Common retracement levels include:

• 38.2%
  
  

• 50%
  
  

• 61.8%
  
  

These levels are widely followed in the US market and often align with institutional buying or selling interest.

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Indicators for Options & Forex Traders

This particular blog focuses primarily on US Stocks. However, there are many traders that look for indicators that cross all markets. 

The following indicators are usually seen as the best indicators for Forex Trading (Foreign Exchange) because they can work in many different timeframes and volatility levels; RSI, MACD (Moving Average Convergence Divergence), Moving Averages. 

For example, RSI and VWAP (Volume Weighted Average Price) are generally thought of as the best technical indicators for option trading due to their ability to help with timing entries.

How Many Indicators Should Traders Use?

Beginners often make the mistake of using too many indicators at once. Professional US traders usually rely on:

• One trend indicator
  
  

• One momentum indicator
  
  

• One volume or volatility indicator
  
  

Using too many tools can cause confusion and conflicting signals.

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Are There “Top 20 Trading Indicators”?

Many platforms list the top 20 trading indicators, but not all are necessary for beginners. What matters is understanding a few core indicators deeply rather than memorizing many without context.

The indicators discussed above form the foundation of most professional trading systems.

Final Thoughts

The proper use of technical indicators can yield substantial benefits. An indicator, in and of itself, should never be viewed as a guarantee for profit. Rather, the use of this type of indicator should help traders develop an informed, disciplined plan to execute successful trades.

Traders in the United States stock markets should focus on the technical indicators that provide them with the most effective means for making trading decisions (e.g., Moving Averages, RSI, MACD, VWAP, and Volume). Regardless of your goal, whether it is to find the best indicator for Intraday Trading, the best technical indicators for Day Trading, or Helpful Tools for Forex/Options Trading - you need to practice, have consistency and maintain proper risk management.

Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves risk, and past performance does not guarantee future results. Always consult a qualified financial professional before trading.