Skilled traders learn to recognize the trend by watching price react to other important levels. Focusing on key relationships, they effectively predict market moves through convergence or divergence over a small number of price bars. Learn to read this powerful axis of price change with three sets of technical indicators that answer three important questions:

• What is the trend or range intensity?
• What is the direction of the next price move?
• When will this price move occur?

All stock movement can be characterized as alternating between trend and range. This observation is true for all time frames. Markets move through a constant cycle of synergy, balance and conflict as trend intensity and direction shift alignment through different period views. The strongest trends arise when multiple time frames stack up into directional positive feedback. The most persistent ranges emerge when discontinuity increases the noise of negative feedback through many periods and stalls price change.

Technical indicators have difficulty viewing both trend and range at the same time. As a result, important formulae tend to align along specialized paths that focus on one or the other. Use trend-following tools such as moving averages, MACD and price ROC to look into the rear view mirror and establish trend strength, momentum and direction. Then reach forward with RSI, Stochastics and other oscillators to inspect swing range cycles that trap markets between measurable extremes.

You can investigate a poorly understood quirk of market behavior using a third class of indicators. Standard deviation and reversion to the mean reveal a strong bias for markets to return to neutral states following supply/demand price swings. Traders exploit this market behavior when they can locate extreme price zones.