An oscillator is any object or data that moves back and forth between two points. In other words, it’s an item that is going to always fall somewhere between point A and point B. Think of when you hit the oscillating switch on your electric fan.
Think of our technical indicators as either being “on” or “off”. More specifically, an oscillator will usually signal “buy” or “sell”, with the only exception being instances when the oscillator is not clearly at either end of the buy/sell range.
Some examples of leading indicators are:
- Parabolic SAR
- Relative Strength Index (RSI)
Each of these indicators is designed to signal a possible reversal, where the previous trend has run its course and the price is ready to change direction.