What is Indicator Analysis?

● Indicator analysis is a method of analyzing market conditions to predict market movements.

● It helps determine whether the current market is overheated or in a slump, aiding in deciding whether it is approriate to buy or sell. Technicak indicators also help in indentifying trends or turning points.

● This method quantifies the balance of supply and demand, making it more objective than chart pattern analysis.

● Indicator analysis can be broadly classified into four categories: trend, momentum, volume, and volatility.

1.Trend Following Indicators

● Trend indicators show the market trend and are most suitable when the market is moving.

● They provide accurate signals when prices are rising or falling but can be less reliable during sideways markets.

● Representative trend – following indicators include bollinger Bands and Parabolic SAR.

2.Oscillators

● Oscillators are suitable for identifying turning points or inflection points in sideways markets.

● They can provide signals too early after a trend starts, which can be risky.

● Oscillators represent all the movements of prices.

● They analyze the plus or minus values derived by subtracting the price of a past certain point from the recent price and display these values on a graph at the current point in time.

● Oscillators are useful when it is difficult to analyze due to minimal price fluctuation and are helpful when trends are not clear.

● Representative oscillators include MACD, RSI, and Stochastic.