Sunday, 30 May 2021

Ultimate Oscillator

 

Buying Pressure (BP) = Current Close – Minimum (Current Low or Previous Close)

 




Ultimate Oscillator = 100 x [(4 x Cycle1) + (2 x Cycle2) + Cycle3] / (4 + 2 + 1)

 

Calculation

If:

·         Cycle 1=7

·         Cycle 2=14

·         Cycle 3=28

Then:

Ultimate Oscillator = 100 x [(4 x Average7) + (2 x Average14) + Average28] / (4 + 2 + 1)

 

Overbought and oversold signals:

In an uptrend:

Buy when the indicator rise above oversold line.

In a downtrend:

Sell when the indicator falls below the overbought line.

Divergence signals:

Buy signal normally at the end of a downtrend: Wait for the bullish divergence in the market. This means, the price should make a lower low, but the indicator should display a higher low.

Sell signal normally at the end of an uptrend: Wait for the bearish divergence. This means, the price should make a higher high, but the indicator should display a lower high.

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