Some traders combine Japanese candlestick patterns with technical analysis indicators. In this section, we present several technical indicators supported by CandleScanner together with a short description. This is not intended to be a detailed guide to the various indicators, which are covered by several excellent texts.
There are two main groups here:
- Technical overlays. Indicators from this group use the same scale as prices and, therefore, can be plotted on top of them. For example, in CandleScanner you plot a Simple Moving Average of close prices directly onto the candlestick chart. Moreover, you can then directly compare the two.
- Technical indicators. Indicators from this group do not use the same scale as prices. For this reason, it's better to plot them in a separate chart, usually below the candle chart. For example, the RSI is an oscillating indicator ranging from 0 to 100. If this indicator was superimposed on the candlestick chart, for example on the EUR/USD FX rate, it would then "flatten" the candlestick pattern rendering it impossible to discern any patterns.
Note that technical analysis indicators are not available in CandleScanner Basic edition.
