Technical indicators are heuristic or pattern-based signals produced by the price, volume, and/or open interest of a security or contract used by traders who follow technical analysis.
Predicting price movements with technical indicators
Technical indicators are used for examining and predicting price movements in the financial markets, by using
- historical price charts and
- market statistics.
Basically, the whole process relies on the idea that if a trader can identify previous market patterns, he could form a prediction of future price trajectories.