Oscillator

A category of technical indicators that fluctuate between fixed upper and lower boundaries, designed to identify overbought and oversold conditions or momentum shifts. The RSI, stochastic oscillator, MACD, and Williams %R are among the most popular. Oscillators work best in range-bound markets where prices move back and forth between support and resistance. In strongly trending markets, oscillators can give premature reversal signals, leading traders to fight the trend -- one of the most common mistakes in technical analysis.