Technical indicators are mathematical calculations based on the price, volume, or open interest of a security or contract. By analyzing historical data, technical analysts use indicators to predict future price movements. Examples of common technical indicators include Relative Strength Index, Money Flow Index, Stochastics, MACD and Bollinger Bands.
There are two basic types of technical indicators:
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®.
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.