An oscillator is a technical analysis indicator that fluctuates between defined boundaries, typically used to identify overbought and oversold conditions. Common oscillators include RSI (Relative Strength Index), Stochastic, and MACD, which help traders assess momentum and potential reversal points. Oscillators complement trend-following indicators in comprehensive analysis.

Oscillator signals include overbought readings above 70 and oversold readings below 30, though these levels vary by indicator and market conditions. Divergences between price and oscillator movements often signal potential trend changes. Understanding oscillator characteristics helps optimize entry and exit timing in various market conditions.

Real-world example: Tesla stock shows RSI oscillator reading of 85, indicating overbought conditions that might suggest potential near-term pullback, prompting traders to consider profit-taking or wait for better entry opportunities.