Overlay and Oscillator

Indicators are usually divided by where they are drawn. An overlay is plotted on the price chart itself and is expressed in the instrument's own prices, so it can be compared directly with the candles — a moving average, or a band drawn around price, is an overlay. An oscillator is plotted in a separate panel below, on its own vertical scale, because its output is not a price at all but a derived quantity such as a difference, a ratio, or a position within a range. The distinction is about units, and it explains what can honestly be compared with what. Two oscillators on different scales cannot be read against each other without knowing what each scale is; an oscillator's value cannot be read as a price level; and an oscillator bounded to a fixed range behaves differently at its edges from one that is unbounded, because a bounded reading can go no further while price still can. What the numbers in a panel mean is defined by the indicator's own formula, which the platform documents.