Technical oscillator

A technical oscillator is a stock market indicator that helps predict the movements of an asset that is traded in both an organized and an unorganized market.

Technical oscillator

Technical oscillators can be customized based on the study that you want to carry out, trying to adjust their movements to the prices of the asset that we are trading.

Variables to take into account in a technical oscillator

Most technical oscillators tend to analyze the following variables:

  • Volatility.
  • Speed ​​of movement in the price.
  • Moving averages of prices combined with trading volumes.
  • Strength in buy positions.
  • Strength in selling positions.
  • Rules based on random prices and complex mathematical rules.

All of them allow to improve the interpretation of the future evolution in the price of an asset, although it is true, in many cases, what happens is that they are delayed in the formation of the buy or sell signal if they only take into account the price. Therefore, it is interesting to combine technical analysis with fundamental analysis .

Types of technical oscillators

The most common technical oscillators are the following:

  • MACD (Moving Average Convergence Divergence)

It is an indicator of convergence and divergence of moving averages.

  • RSI (Relative Strength Index)

It shows the price strength by comparing individual movements up or down taking into account the closing prices.

  • Stochastic

In a statistical indicator that is built based on a maximum price and a minimum price in a specific time interval.

  • Momentum

It measures the speed of movement in price. It is a very useful indicator if you know how to interpret.

  • ATR (Average True Range)

Provides a measure of market volatility.

There are more technical oscillators that are used with in stock analysis , we can highlight the Commodity Channel Index, De Marker, Force Index, Bulls Power.