Technical Indicators

Technical indicators are mathematical calculations based on the price, volume, or open interest of a stock. By analyzing historical data, technical analysts use indicators to predict future price movements. There are two basic types of technical indicators:
1. Overlays – Technical indicators that use the same scale as prices are plotted over the top of the prices on a stock chart. Examples include moving averages and Bollinger Bands.
2. Oscillators – Technical indicators that oscillate between a local minimum and maximum are plotted above or below a price chart. Examples include the MACD or RSI.
A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random price fluctuations. It is a trend-following, or lagging, indicator because it is based on past prices.
The Relative Strength Index – RSI is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.