Mechanical indicators

Mechanical indicators or oscillator, as they are widely known, as basically tools to measure the momentum of the price action. It all started with moving averages, but as technical analysis began to grow, analysis started making their own computer has brought about a huge surge in the ability to create various permutation and combination, which in turn, result in more, complex oscillators. Since the momentum and one has to be extremely particular in the application of such mechanical indicators and one has to be extremely particular in the application of such tools.

The art of technical analysis is all about identifying trend reversals at rather early stage and presumption that the new trend will continue in a particular direction until it reverses. The underlying basis of such assumption is that a trend continues to be mentioned until significant amount of evidence suggests otherwise.

All mechanical indicators, however “working” they may be, can fail from time to time. That is particularly why it is pertinent to note that a single mechanical indicator pointing towards a probable trend reversal is considered to be insufficient evidence. It would be better to take a holistic view and use several mechanical indicators to pointing towards a probable trend reversal. Only when a majority at arriving at a conclusion to determine the direction of trend. Only when a majority of such mechanical indicators reach a consensus can there be more reliability at arriving at an opinion of probable trend. Mechanical indicators are normal circumstances are plotted beneath the price chart to analyze to make the comparison relatively convenient. At times, multiple, mechanical indicators are plotted below the price while a few like the Bollinger Bands are plotted on the price.