In general, an oscillator is any data that moves back and forth between two points, somewhere between point A and point B. More specifically into forex, an oscillator will usually signal “buy” or “sell” with the only exception being instances when the oscillator is not clear at either end of the buy/sell range.
Oscillators work under the premise that as momentum begins to slow, fewer buyers (if in an uptrend) or fewer sellers (if in a downtrend) are willing to trade at the current price. A change in momentum is usually a sign that the present trend is weakening. Each of those indicators is meant to signal a possible trend reversal, where the previous trend has run its course and therefore the price is prepared to vary direction.
Momentum indicators are types of oscillators that are graphic devices which show how rapidly the price of a given asset is moving in a particular direction. Also, they can give traders an idea of whether the price movement is likely to continue on its trajectory. The principle behind the momentum indicator is that as an asset is traded, the speed of the worth movement reaches a maximum when the doorway of latest investors or money into a particular trade is at its peak. When there’s less potential new investment available, the tendency after the highest is for the price trend to flatten or reverse direction.
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