Technical indicators are like office gossip: they often rely on each other to paint a clearer picture, but you still have to be careful about which ones you trust!

Technical indicators often rely on other indicators or price data to function effectively. Here are some examples of how this dependency can manifest:

Moving Averages and Oscillators:

Relative Strength Index (RSI): This is calculated based on the average gains and losses over a specified period, which can include moving averages of price changes.

Moving Average Convergence Divergence (MACD): This uses two moving averages (usually the 12-day and 26-day EMAs) to generate the MACD line, and the signal line is often a 9-day EMA of the MACD line.

Bollinger Bands:

Bollinger Bands are constructed using a moving average (typically a 20-day SMA) and standard deviations of price data. The bands adjust based on the volatility of the price.

Stochastic Oscillator:

This indicator compares a particular closing price of a security to a range of its prices over a certain period. The %K line is based on the most recent closing price, the highest high, and the lowest low over a specified period. The %D line is a moving average of the %K line.

Directional Movement Index (DMI):

This indicator is used in conjunction with the Average Directional Index (ADX). The DMI includes the Positive Directional Indicator (+DI) and the Negative Directional Indicator (-DI), which are based on price movements over a given period. The ADX itself is a smoothed average of the absolute difference between the +DI and -DI.

Ichimoku Cloud:

This complex indicator includes multiple components such as the Tenkan-sen (conversion line), Kijun-sen (base line), Senkou Span A and B (leading spans), and the Chikou Span (lagging span). These components are calculated based on various moving averages and midpoints over different time periods.

Parabolic SAR:

This indicator is based on price and time, and it calculates a series of potential stop and reverse points, which are used to determine the direction of the trend. It depends on the price changes over time to adjust its values.

Average True Range (ATR):

The ATR is used to measure volatility, and it is calculated as a moving average of the true range values over a specified period. The true range is the greatest of the current high minus the current low, the absolute value of the current high minus the previous close, and the absolute value of the current low minus the previous close.

Understanding these dependencies helps traders use technical indicators more effectively, as they can see how one indicator might influence another and how they can be combined to provide a more comprehensive view of market conditions.