oscillator vs indicators

indicators

**Oscillators:** Rather than being overlaid on a price chart, technical indicators that oscillate between a local minimum and maximum are plotted above or below a price chart. Examples include the stochastic oscillator, MACD, or RSI.

- Relative strength index (RSI)
- Moving average convergence divergence (MACD)
- Bollinger Bands

Best trading indicators

- Moving average (MA)
- Exponential moving average (EMA)
- Stochastic oscillator
**Moving average convergence divergence (MACD)****Bollinger bands**- Relative strength index (RSI)
- Fibonacci retracement
- Ichimoku cloud
- Standard deviation
- Average directional index

Moving average (MA)

The MA – or ‘simple moving average’ (SMA) – is an indicator used to identify the direction of a current price trend, without the interference of shorter-term price spikes.

200-day MA requires 200 days of data

Exponential moving average (EMA)

The most popular exponential moving averages are 12- and 26-day EMAs for short-term averages, whereas the 50- and 200-day EMAs are used as long-term trend indicators.

**Fibonacci retracemen**t is an indicator that can pinpoint the degree to which a market will move against its current trend. A retracement is when the market experiences a temporary dip – it is also known as a pullback.

The **Ichimoku Cloud**, identifies** support and resistance levels**. However, it also estimates **price momentum and provides traders with signals to help them with their decision-making.**

Bollinger Band

typically use a 20-day moving average.

The upper and lower bands are typically** 2 standard deviations** +/- from a 20-day **simple moving average** and can be modified.

typically using a **20-day SMA.** A 20-day SMA averages the closing prices for the first 20 days as the first data point

**squeeze** signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities.

On Balance Volume (OBV)

**measures buying and selling pressure as a cumulative indicator that adds volume on up days and subtracts volume on down days**.

measure the **positive and negative flow of volume in a security over time. **

If the price is rising but OBV is falling, that could indicate that the trend is not backed by strong buyers and could soon reverse.

Average Directional Index ADX

measure the **strength and momentum of a trend.**

The **ADX is the main line on the indicator**, usually** colored black.** There are two additional lines that can be optionally shown. These are **DI+ and DI-. These lines are often colored red and green,**

- ADX above 20 and DI+ above DI-. That’s an uptrend.
- ADX above 20 and DI- above DI+. That’s a downtrend.
- ADX below 20 is a weak trend or ranging period, often associated with the DI- and DI+ rapidly crisscrossing each other.

MACD moving average convergence divergence indicator

see the trend direction, as well as the momentum of that trend. It also provides a number of trade signals. When the MACD is above zero, the price is in an upward phase. If the MACD is below zero, it has entered a bearish period.

The indicator is composed of two lines: the **MACD line and a signal line,** which moves slower. When **MACD crosses below the signal line, it indicates that the price is falling.** When the** MACD line crosses above the signal line, the price is rising.**

Relative Strength Index RSI Indicator

The indicator moves between **zero and 100,** plotting recent price gains versus recent price losses. The RSI levels therefore help in gauging momentum and trend strength.

RSI 70: RSI moves above 70, the asset is considered overbought and** could fall.**

RSI 30: When the RSI is below 30, the asset is oversold and** could rally**

RSI 50+ UP trend

RSI 50-downtrend

price & time valuates.

RSI in week use 7 instead of 14.

**Divergence is another use of the RSI**. When the** indicator is moving in a different direction than the price, it shows that the current price trend is weakening and could soon reverse.**

A 3rd use for the RSI is **support and resistance levels. During uptrends**, a stock will often hold above the 30 level and frequently reach 70 or above. When a stock is in a downtrend, the RSI will typically hold below 70 and frequently reach 30 or below.

Stochastic Oscillator

measures the current price relative to the** price range over a number of periods**. Plotted **between zero and 100**, the idea is that the price should make new highs when the trend is up. In a downtrend, the price tends to make new lows. The stochastic tracks whether this is happening

Values above **80 are considered overbought, while levels below 20 are considered oversold.**

Is Technical Analysis Reliable?

**but the range of success is varied and its accuracy remains undecided**. It is best to use a suite of technical tools and indicators in tandem with other techniques like fundamental analysis to improve reliability.