From the word analogy, a trading analog compares the current market situation to a similar market pattern which occurred in the past. The idea is that if the present conditions have been mostly tracing a prior pattern, then a continued pattern match is likely. Another way to use a trading analog is to compare how the market reacted to certain past events. From here, a distribution of probable outcomes can be evaluated. 

Also, both patterns under comparison can be measured in terms of correlation (how synchronized directional movements are) such as measuring how many standard deviations or z-scores (units of standard deviation with one SD being a 68.3% chance) they diverge by. These findings might be significant if there has been a strongly positive correlation but then a sudden divergence, which might soon become corrected as a reversion (return) to that strongly positive correlation.