What are technical analysis indicators?



Indicators are an important element of technical analysis. Indicators are pattern-based signals created through the price, volume, and/or open interest of a security or contract used by traders under technical analysis. Traders who follow technical analysis use indicators to forecast the movements in price. Some examples of common technical indicators are- the Relative Strength Index, Money Flow Index, Stochastic RSI, MACD and Bollinger Bands.


Technical indicators are used by analysts and chartists to study price data and understand when to enter or exit the trade in stock market. It is an instrument produced to study investments and know best trading opportunities, like the volume and price movement. It can be useful for any historical trading data such as futures, stocks, commodities, fixed income, currencies and different securities. Active traders commonly use indicators because they analyze short-term price movements through it. 


Indicators in stock market are divided into 2 major categories- overlays and oscillators. Under overlays, the technical indicators are produced in a way to create the same scale like prices are shown on the top of prices on a stock chart. Major examples are moving averages and Bollinger Bands. In case of oscillators, the technical indicators change between a local minimum and maximum which are plotted above or below a price chart. Examples are Stochastic oscillator, MACD or Stochastic RSI. 


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