RSI, MACD and Stochastic in Plain English

What all three have in common

RSI, MACD and the Stochastic oscillator are momentum indicators. Each takes past price movement and compresses it into a number or a pair of lines. None of them predicts the next candle — they describe what already happened, and they are only useful if you decide in advance what you will do with that description.

RSI — Relative Strength Index

RSI compares recent up-moves with recent down-moves over a lookback window, most often 14 candles, on a 0–100 scale.

• Above 70: buyers have dominated lately — often called “overbought”.
• Below 30: sellers have dominated — “oversold”.
• Around 40–60: momentum is roughly balanced.

In plain English, RSI asks: how hard has price been pushing up versus down lately? Its classic weakness: in a strong trend RSI can sit above 70 while price keeps climbing, so “overbought” alone is not a reason to sell.

MACD — Moving Average Convergence/Divergence

MACD subtracts a slower moving average (commonly 26 periods) from a faster one (commonly 12) to get the MACD line, then smooths that line (commonly 9 periods) into a signal line.

• MACD crosses above the signal line: short-term momentum is turning up.
• Crosses below: short-term momentum is turning down.
• Gap between the lines: how strong that turn is.

In plain English, MACD asks: is the fast trend pulling away from the slow trend? It is smooth but it lags, which matters on very short expiries.

Stochastic oscillator

The Stochastic compares the latest close with the high–low range over a lookback window.

• %K near 100: price closed near the top of its recent range.
• %K near 0: it closed near the bottom.
• %D is a smoothed %K; crossings between the two are the classic trigger.

In plain English: where did the latest close land inside the recent range? It reacts fastest of the three, which also means it gives the most false signals on short timeframes.

How they differ at a glance

• RSI — up versus down momentum; medium speed; read for stretched moves.
• MACD — fast versus slow average; slowest and smoothest; read for trend direction.
• Stochastic — close versus recent range; fastest and noisiest; read for timing.

Which of these does Avalisa use?

Straight answer: RSI, yes. MACD and Stochastic, no. Avalisa PO Bot has two strategies. Martingale does not read indicators at all: you choose the direction (Always Buy, Always Sell or Alternating) and it manages the stake after each loss. Avalisa Bot (a Pro feature) is rule-based and reads a 14-candle RSI, a 20-candle moving average, Bollinger Bands, short-term momentum and the colour of the last candle.

It first decides whether the market is trending or ranging, then checks four rules for that condition:

• Trending: the trend direction, a pullback toward the 20-candle average, RSI between 40 and 60, and a confirming candle colour.
• Ranging: RSI below 30 or above 70, price outside a Bollinger Band, momentum turning back, and a confirming candle colour.

The Intensity setting is simply how many of those four rules must agree before it trades: Low = 2, Mid = 3, High = all 4. When it skips, the panel shows how many rules were met (for example 2/3), so you can see why it did not trade. It also skips very volatile conditions entirely. All of this runs inside the extension — no AI model is asked for a prediction. Requiring more rules means fewer trades; it does not mean guaranteed wins.

Before you automate any indicator

1. Pick one timeframe and stick to it. Indicator readings change with the timeframe.
2. Look for agreement, not one trigger. One overbought reading against a clear uptrend is weak evidence.
3. Write your limits down first. If you use Martingale, the real cap is the Steps setting: Steps = N allows N + 1 trades in a losing cycle, so at 2x, Steps 3 costs 15 times the base stake. There is no separate stop-loss setting.
4. Set a minimum payout. A lower payout raises the win rate you need just to break even (1 / (1 + payout): 52.1% at 92%).
5. Start on a demo account with the timeframe and pairs you plan to use.
6. Keep the Pocket Option tab visible while the bot trades — a background or minimised tab can delay trade-result detection.

Frequently asked questions

Can I add MACD or Stochastic to Avalisa Bot?

No. The rules are fixed; the setting you control is Intensity (how many of the four rules must agree), plus timeframe, minimum payout and pair scan.

Which indicator is best for short timeframes?

There is no best one. Faster indicators react sooner and give more false signals on short expiries; slower ones lag. Test on demo with your own timeframe.

Do I need to understand the maths to use the bot?

No. It helps to know what the rules mean so you can read the panel and choose an Intensity, but you do not need to calculate anything.

What does Avalisa cost?

The free Demo plan gives 10 Martingale trades plus webapp bot and dashboard access. Basic is $69 one-time. Pro, which adds Avalisa Bot, is $119 one-time or $29/month — a real recurring subscription — your choice at checkout. See /pricing.