The gear indicator works by looking at the MPH vs. RPM. If that is indicating improperly, maybe the clutch is responsible. I can make my gear indicator misbehave if I slip the clutch while riding.
2011 XR Midnight Cherry, Hard Bags, Vic htd grips & seat, Vic medium Windshield, unlocked speedo, Lloydz Air filter, VFC III, Lloydz ATS +4, Vance & Hines slip ons
1993 Vulcan 1500 (sold)
1981 Yamaha Seca 750 (ridden into oblivion)
1977 Honda 550 (sold)