With regards to technical analysis, are there ways of determining the confidence level of a directional signal? Taking a relative strength index (RSI) as an example, can the extent to which an asset is oversold or overbought be used to get the percentage likelihood of a movement in either direction?
You need a model which assumes that some intrinsic properties such as true overpricing is taking place but masked by the noise which has some probabilistic distribution around the true signal. The averaging of the observed data then takes advantage of the large number theorem or some version of the central limit theorem to flush out the signal. So you need to build a model first.