Traders get discouraged using technical analysis because it is often wrong. No sooner do you get a juicy breakout than price turns around and slumps under the breakout bar — the so-called false breakout. The most reliable indicator, the moving average, lags price action so much you often are already in the second move before the moving average has confirmed the first one.

One idea is to divide technical indicators into two camps: those that tell you what is happening and those that tell you what is likely to happen next. Here’s one way to do that.