This section covers technical indicators that oscillate from one value to another. Most oscillators measure the velocity of directional price or volume movement. These indicators often go into overbought and oversold zones, at which time a reaction or reversal is possible. The slope of the oscillator is usually proportional to the velocity of the price move.
Likewise, the distance the oscillator moves up or down is usually proportional to the magnitude of the move.
Oscillators are best used for ranging markets rather than on trending markets.