Oscillators are indicators used in technical analysis that vary over time and are bound within a range (between set levels or above and below a centerline). Oscillators are not applied on the chart itself but usually at the bottom of a financial instrument’s chart.

On all oscillators, traders look for 3 things:

  • Area: Is the price in overbought or oversold areas(above or below the defined range).
  • Trend: Comparing the oscillator with its ‘Moving Average’ helps to indicate signals of a rise or drop in the price levels.
  • Divergence: When prices and an indicator move in opposite directions, it gives a going up or down signal.

The most commonly used oscillator indicators are: MACD, RSI, CCI and ROC.