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Technical Indicators

Tutorial

Price is the primary tool of technical

analysis because it reflects every factor affecting the value of a

market. However, price doesn’t produce just trend lines and basic

chart patterns. Analysts have expanded their research far beyond

those basic elements to develop a number of technical indicators

that provide more insight into price action than what you see on the

surface. You may be able to see that a market is “extended”

(overbought or oversold) just by looking at a bar chart, but an

indicator can put a number to it and confirm your thinking.

First, a warning about indicators in general.

Most analysts do not rely on only one indicator but often use

several indicators together to help make a trading decision because

of the misleading information one indicator might provide. An

oscillator indicator is not a trading system but only provides

helpful insights in certain market conditions.

Oscillators tend not to work well in markets