Technical analysis studies price and volume to identify trends and patterns. Fundamental analysis looks at a company’s earnings and assets, while technical analysis looks at how the market has actually priced the share. Many investors use both: fundamentals to choose the company, and technical tools to assess trend and timing.
This article explains the two most widely used tools: moving averages and RSI.
Moving averages
A moving average is the average of the closing prices over recent days, recalculated every day. A 50-day moving average is the average of the last 50 closing prices. When a new day is added, the oldest drops out, and the average moves forward.
The result is a line in the price chart that smooths out daily swings and makes the trend clearer.
Short and long periods
| Period | Typical use | Characteristic |
|---|---|---|
| 20 days | Short-term trend | Reacts quickly but gives many signals |
| 50 days | Medium-term trend | Balance between sensitivity and stability |
| 200 days | Long-term trend | Reacts slowly but gives few false signals |
How to read moving averages
- Price above the average: Often read as a positive trend.
- Price below the average: Often read as a negative trend.
- Rising average: The trend points upwards.
- The average as support or resistance: The price often pauses at a widely followed average, because many investors trade around it.
Golden cross and death cross
When the 50-day average crosses above the 200-day average, it is called a golden cross and read as a positive signal. When it crosses below, it is called a death cross. The signals are popular but often come late, after much of the move has already happened.
RSI: relative strength index
RSI measures how strongly the price has risen compared with how much it has fallen over a period, usually the last 14 days. The result is a number between 0 and 100.
| RSI | Common reading |
|---|---|
| Above 70 | Overbought: the price has risen sharply and may be due for a pause |
| 30–70 | Neutral range |
| Below 30 | Oversold: the price has fallen sharply and may be due for a rebound |
It is important to understand that overbought does not mean the price will fall. In a strong trend, RSI can stay above 70 for a long time while the price keeps rising. Likewise, a share in a strong downtrend can stay oversold for a long time.
Divergence
Some analysts look for divergence: the price reaching a new high while RSI does not. That may suggest the move is losing strength. Such signals are also uncertain and should be confirmed by other factors.
The limitations
Some typical pitfalls:
- Trading on every signal. In sideways markets the price crosses the average back and forth, and you can end up with many trades and high fees.
- Forgetting fundamentals. A share can look technically strong just before a disappointing quarterly report.
- Treating overbought as a sell signal. Strong shares can stay overbought for a long time.
The price chart on AksjeNet
Every stock page on AksjeNet has a price chart with period selection and moving averages. You can switch between price and return, and compare the price with the averages to see the trend. The model scores and signals on AksjeNet are also based on trends over different time horizons, together with other factors.
Live prices from the latest close. Signals are model-based, not recommendations.
Next steps
- Read how AksjeNet calculates scores and signals
- Read how to interpret buy, hold and sell signals
- See the Oslo Børs price list