Technical indicators are mathematical calculations based on the price, volume, or open interest of a security or contract.
Technical analysis relies on the assumption that all information is already reflected in the price of a security, which means that analysis of that price is all that matters. By looking at price patterns and statistics, technical analysts try to gauge the market’s overall sentiment and determine where prices may be headed.
There are two primary indicators viz. a) Leading Indicators. Leading indicators precede price movements and try to predict the future and b) Lagging Indicators. Lagging indicators follow price movements and act as a confirmation tool.