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Indicator definition
An indicator is a technical-analysis tool that runs a calculation on market data such as price, volume, or open interest. It turns raw data into a reading that helps you assess market conditions.
An indicator can highlight trend, momentum, volatility, and overbought or oversold conditions. Common ones include moving averages, the Relative Strength Index, Moving Average Convergence Divergence, Bollinger Bands, and the Stochastic Oscillator.
An indicator differs from raw price action, which reads the bare candles and structure with no calculation layered on top. An indicator does not guarantee the next move, so traders combine it with price action, support and resistance, and risk management before they enter or exit.
Indicator Example
You apply the Relative Strength Index to a EUR/USD chart.
The RSI rises above 70, which can mean the pair is overbought.
You do not sell on that alone. You wait for price to reject resistance, then treat the indicator reading as one part of a confirmed setup.
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