I would agree, that is the purpose of the wire you indicated.
The 'movement' signal telling the flasher module that the bike is moving. The flasher module then calculates when you have moved the pre-determined limit to turn off the signals.
I cannot tell you if it is an analog signal or digital. My electrical background makes me think that it is digital, a pulse for every so many feet travel. Probably the same pulse that drives the odometer stepper motor.