Feature |
Indicators |
Oscillators |
Definition |
Mathematical tools to analyze trends, momentum, volatility, and volume. |
Tools that oscillate within a range to detect overbought/oversold conditions. |
Purpose |
Confirm trends, measure momentum, and gauge volatility. |
Identify overbought and oversold conditions, predict reversals. |
Best for |
Trend-following strategies in trending markets. |
Range-bound markets with sideways price movement. |
Market Condition |
Strong trending markets. |
Consolidating (sideways) markets. |
Range of Movement |
Open-ended (e.g., Moving Averages can rise indefinitely). |
Confined within a range (e.g., RSI moves between 0-100). |
Timing |
Usually lagging, confirming trends after they occur. |
Usually leading, predicting potential turning points. |
Use Case |
Identifying trend direction and continuation. |
Timing entries/exits based on overbought/oversold conditions. |
Works Best With |
Moving Averages, Bollinger Bands, MACD (for trend-following). |
RSI, Stochastic, MACD (for spotting reversals). |
Key Weakness |
Late signals; poor performance in range-bound markets. |
Too many false signals in strong trends. |