What does an oscillator's range indicate?

An oscillator generally provides a range of values that helps traders analyze market conditions, typically fluctuating between two thresholds. In many commonly used oscillators, such as the Relative Strength Index (RSI) or the Stochastic Oscillator, the values are confined to a specific set of bounds, often between -100 to 100 or 0 to 100. This defined range facilitates the interpretation of market momentum, indicating overbought or oversold conditions based on where the oscillator currently lies within that span.

By having a fixed range, traders can assess whether market conditions are potentially turning in favor of buyers or sellers, aiding in decision-making about entry and exit points. This relationship of bounded values allows for clearer analysis compared to concepts that do not have constrained ranges, making option B the most accurate representation of an oscillator’s range.