




A technical indicator is a series of values derived (i.e. using a mathematical formula) from historical data of an asset (e.g. price, volume). A common use of a technical indicator is to try to predict future price movements using prior price data. Some examples of a technical indicator are the simple moving average (SMA), the relative strength index (RSI), and the exponential moving average (EMA). The data from one technical indicator can be combined with another's to form a third technical indicator such as the moving average convergence/divergence (MACD) which might compare SMAs from a short time period to a longer one. The data from a technical indicator can confirm price trends, show an imminent price reversal, identity entry points for a trade and clean "noise" from a price chart. Technical indicators are primarily used by chartists as opposed to fundamental traders that prefer to trade based on criteria such as P/E ratios rather than a technical indicator.
Rate this technical indicator definition...




Where is the market headed? The answer may surprise you. Find out with the exclusive & Barron's recommended charts of Chart of the Day. 

Popular Terms: required rate of return, exdividend date, Key Rate Duration, FICO score, VIX, deferred revenue, class C shares, in escrow, whollyowned subsidiary, reverse mortgage, minority interest, option premium, risk management, LIBOR, irrevocable trust, average price per share, 144a, implied volatility, margin rate, annual return, current ratio, dividends payable, Zero Cost Collar, real GDP, limit order, EBITDA, open position, stock market close, cancelled check, retained earnings, debt service coverage, deferred tax, phantom income, command economy, APR, exdividend, FTSE, per diem, 1031 exchange, labor relations, inflation, stock split, covered put, 401a, diluted share, liquidity ratio, balance sheet, 1035 exchange, quality assurance


 