momentum oscillators

7/28/2019 Momentum Oscillators

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Momentum Oscillators:

Objective, Selective, Effective

The MOOSE is Loosewww.cedarcreektrading.com
http://www.cedarcreektrading.com/http://www.cedarcreektrading.com/


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Momentum Oscillators

I believe the most useful tools employed by techniciansare momentum oscillators. The momentum oscillator

measures the velocity of directional pricemovement. When price moves up, at some point the

market is considered to be overbought; when it movesdown, at some point the market is considered to be

oversold. In either case, a reaction or reversal isimminent.


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Moving Average Oscillator

Bollinger Band Oscillator

StochasticRSI Oscillator Fibonacci Chande Momentum Oscillator

Standard Error Oscillator

MACD Oscillator



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The slope of the momentum oscillator is directlyproportional to the velocity of the move. Thedistance traveled up or down by the momentum

oscillator is proportional to the magnitude of themove. The momentum oscillator is usuallycharacterized by a line on a chart drawn in two

dimensions. The Y axis (vertical) representsmagnitude or distance the indicator moves; theX axis (horizontal) represents time.



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The momentum oscillator drawn in this manneris characterized by the fact that it moves veryrapidly at market turning points and tends to

slow down as the market continues thedirectional move.



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CCT Moving Average Oscillator

The first formula I ever programmed wasmoving average oscillator (with my TandyModel I1979). Ive built many oscillators

based on moving averages. This MAO is a 3-day simple moving average of the differencebetween a 3 and 13 day sma.

Mov(Mov(C,3,S)-Mov(C,13,S),3,S)


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Bollinger Band Oscillator

Bollinger Bands were developed by John Bollinger andare envelopes that are plotted at two (2) standarddeviation levels above and below a movingaverage. Long ago, Uncle Steve reconfigured the classicbands and invented the Bollinger Band Oscillator.

The new indicator constructs two (2) parallel linesinstead of the erratic envelopes. These parallel linesrepresent a measurement of two (2) standard deviationsfrom the mean and are assigned zero and 100 on thechart. The indicator represents the price as it travels

above and below the mean (50%) and outside the twostandard deviations (zero and 100). Penetration of theupper or lower band represents overbought andoversold conditions.

((C+2*Std(C,21)-Mov(C,21,S))/(4*(Std(C,21)))*100)


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StochasticRSI Oscillator

Roger Altman, William Blau, Stanley Kroll, andTushar Chande have all improved on J. WellesWilders Relative Strength Index. I believe thebest of these derivative indicators is the

Stochastic RSI. MetaStock offers one version ofthis indicator on their formula page. Thisversion is just one of many I use. I like

substituting the numbers 3, 5, & 8 in thisformula.

Mov( ( RSI(8) - LLV( RSI(8) ,8 ) ) / ( ( HHV(

RSI(8) ,8) ) - LLV(RSI(8),8) ),3,E) *100


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Fibonacci Chande Momentum

Oscillator

The Fibonacci Chande Momentum Oscillator(FibCMO) is a modification of the ChandeMomentum Oscillator (CMO).

The FibCMO is a great timing device for entry,especially if timing into swing tradeswith thetrend.

This indicator is an example how a trader cantake a formula and improve its performance bythinking outside the box.

((CMO(C,3))+(CMO(C,5))+(CMO(C,8)))/3


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Standard Error Oscillator

During the past year, I have become fascinatedwith Standard Error Bands. Heres a formula

that I use to determine overbought and oversold

situations in the index futures markets.

(C+2*STE(C,8)Mov(C,3,S))/(4*(STE(C,8)))*100


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MACD Oscillator

Most technical analysts (including Equis International)believe the MACD indicator is "the difference between12-day and 26-day exponential moving averages." Ivenever been one to run with the crowd (even though I

was part of the Merrill Lynch herd). Uncle StevesMACD Oscillator substitutes fibonacci numbers,creating an indicator that is smoother than a lot ofpublished versions.

(Mov(C,13,E) - Mov(C,21,E))-(Mov((Mov(C,13,E) -Mov(C,21,E)),5,E))


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LinReg Oscillator

This momentum oscillator is an extension of mylate 70s work (see CCT Moving Average

Oscillator). It simply plots a comparison of two

linear regressions. Both the length of theregression and the amount of lag time are

pegged to a fibonacci number.

(LinearReg(C,13)/Ref(LinearReg(C,13),-13))-1


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C d C k T d CTA


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Cedar Creek Trading, CTA

Steve Karnish, Principal

1-877-668-1125

Uncle Steve hard at work..

momentum oscillators

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