Oscillator

An oscillator is a technical indicator that fluctuates between two levels on a price chart. It helps traders assess momentum and identify potential market conditions, such as overbought or oversold situations.

Oscillators can be divided into two main categories:

1. Centered oscillators: they fluctuate above and below a central point or line, typically around zero. The center line acts as a baseline, helping traders identify shifts in momentum or trend direction;
2. Banded oscillators: they move within a fixed range, typically between overbought and oversold extremes. They help traders spot when a market might be due for a reversal based on the asset being in an overbought or oversold condition.

Oscillators in technical analysis are widely used to help traders assess momentum, price strength, and market conditions, and they are often used in conjunction with other indicators to refine trading decisions. Some of the most commonly used oscillators and Relative Strength Index (RSI), Momentum and Stochastic oscillators, MACD (Moving Average Convergence Divergence) and Commodity Channel Index (CCI).