Technical analysis uses statistics related to market activity, such as past prices and the volume of shares traded, to identify patterns that may suggest future share price. It is different from fundamental analysis in that it does not involve determining a stockâ€™s intrinsic value, but is similar in that both valuation methodologies seek to identify stocks that are either overvalued or undervalued.
Investors can use several different indicators to determine if a stock is undervalued. Technical investors will look at these indicators in chart form when evaluating shares.
OnBalance Volume (OBV)
Combines volume and price movement to show the flow of volume relative to price over time. If changes in volume precede changes in price, an increase in trade volume could indicate that a stock is shifting away from being undervalued.
Accumulation/Distribution (A/D) Line
Looks at the closing price and trading period for a stock over a period of time, and is designed to give a picture of money flow. An upward trend shows increasing buying. Even if the price of a stock is moving sideways, an increasing A/D line shows that the stock was being accumulated.
Average Directional Index (ADX)
Measures the strength and momentum of a trend. Because ADX is nondirectional it doesnâ€™t show the direction of the trend, which is why investors typically plot two other indicators alongside ADX. Values above 20 indicate that a trend is increasing, while a value of 40 indicates that a trend is exhausted and may reverse.
Aroon Indicator
Used to determine whether a stock is in a trend, and how significant that trend is. There are two indicator lines â€“ one bullish and one bearish â€“ though they can be combined into one value for simplicity. When using a single oscillator, the higher the number, the more bullish the predictor. An investor may consider an increasing Aroon indicator value a sign that a stock is potentially undervalued.
Moving Average Convergence Divergence (MACD)
This indicator is comprised of two exponential moving averages, and is designed to signal the trend and momentum behind a stock. It measures shortterm momentum versus longterm momentum by taking the difference between the moving averages for both terms.
Relative Strength Index (RSI)
This indicator is used to signal overbought and oversold conditions for a stock. Low values suggest that the stock is oversold.
Stochastic Oscillator
Shows whether a trend is closing in on highs or lows of a trading range, with oversold conditions below a value of 20 and overbought conditions above 80.

What are the best indicators to identify overbought and oversold stocks?
Learn about the interpretation of the relative strength index and stochastics, two of the most popular indicators of overbought ... Read Answer >> 
What technical tools can I use to measure momentum?
One of the main goals of every trader using technical analysis is to measure the strength of an asset's momentum and the ... Read Answer >> 
What are the best technical indicators that complement the Volume Price Trend Indicator ...
Explore the uses of the volume price trend indicator (VPT) and learn the best technical indicators to use in conjunction ... Read Answer >> 
How can a business eliminate deadweight loss from government regulation?
Understand the basics of the stochastic oscillator and how to use this momentum metric in tandem with other indicators to ... Read Answer >> 
What are the most common momentum oscillators used in forex trading?
Explore two frequently used momentum indicators in forex trading, the moving average convergence divergence, or MACD, and ... Read Answer >> 
Why is the Williams %R oscillator important for traders and analysts?
Understand the technical momentum indicator Williams %R and how it is commonly utilized by traders and market analysts to ... Read Answer >>

Trading Strategies
Technical Analysis: Indicators And Oscillators
By Cory Janssen, Chad Langager and Casey MurphyIndicators are calculations based on the price and the volume of a security that measure such things as money flow, trends, volatility and momentum. ... 
Trading Strategies
Technical Analysis: Conclusion
By Cory Janssen, Chad Langager and Casey MurphyThis introductory section of the technical analysis tutorial has provided a broad overview of technical analysis. Here's a brief summary of what ... 
Insurance
Exploring Oscillators and Indicators: Average Directional Index
By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The average directional index (ADX) is a trend indicator used to measure the strength and momentum of an existing trend. ... 
Insurance
Exploring Oscillators and Indicators: Conclusion
By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The goal of every shortterm trader is to determine the direction of a given asset's momentum and to attempt to profit from ... 
Trading Strategies
Beginner's Guide To Stockcharts.com: Indicators
Indicators are calculations based on price and volume history of a ticker. There are many different indicators, each with a unique formula used to measure such things as volatility, momentum, ... 
Technical Indicators
The Top Technical Indicators For Commodities Investing
Traders can use "the usual suspects" (standard indicators for trend trading) when it comes to choosing indicators for investing in commodities. Here's how. 
Forex Education
Finding Market Movement With The ADX
Take a closer look at this indicator, which refines your insight into the strength of a prevailing trend. 
Insurance
Exploring Oscillators and Indicators: Leading And Lagging Indicators
By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com Indicators can be separated into two main types  leading and lagging  both differing in what they show users. Leading ... 
Active Trading Fundamentals
Confirming Price Movements With Volume Oscillators
Use this indicator to validate a change in price direction and moving averages. 
Chart Advisor
Three Stocks Beginning An Upward Trend
Using the +DI indicator, the DI indicator, and their derivative ADX indicator, traders can find stocks that are starting to trend.

Accumulation/Distribution
An indicator that tracks the relationship between volume and ... 
Accumulation/Distribution
A momentum indicator that attempts to gauge supply and demand ... 
Undervalued
A financial security or other type of investment that is selling ... 
Oversold Bounce
An oversold bounce is a rally in prices that occurs due to the ... 
Volume Price Trend Indicator  VPT
A technical indicator consisting of a cumulative volume line ... 
Oversold
1. A condition in which the price of an underlying asset has ...