Overlay indicators are a fundamental trading and technical analysis technique that involves superimposing one trend on top of another. In the case of a chart overlay, this simply means displaying two lines of different colours on a chart so that they are both visible.

An overlay indicator is a technical analysis tool plotted directly on a price chart rather than in a separate window. It moves with price action and helps traders interpret trends, momentum, and potential support or resistance levels in real time. Common examples include moving averages, Bollinger Bands, and trendlines.

Overlay indicators are useful because they provide context without separating price from analysis. Traders use them to identify trend direction, confirm entries and exits, and manage risk more effectively. For example, a rising moving average can signal an uptrend, while a price touching Bollinger Bands may suggest overbought or oversold conditions.

Because they sit on the chart itself, overlay indicators are easy to interpret and are widely used across forex, stocks, and crypto markets.