Technical Indicators

Technical indicators are formulas that turn an asset's past prices, and often its trading volume, into lines or values that can be shown on a chart, as part of technical analysis. They fall into broad families. Trend indicators, such as the moving average and the average directional index, show the direction and strength of a trend. Momentum indicators, such as the relative strength index and the stochastic oscillator, measure the speed of price changes and highlight overbought or oversold conditions. Volatility indicators, such as Bollinger Bands, track how widely prices are swinging, and volume indicators, such as on-balance volume, gauge participation. Most indicators are lagging, because they are built from past data, so traders often combine several and use them to support decisions rather than to forecast prices with certainty.