McClellan Oscillator: Signals Explained
Developed & Created by McClellan.
The McClellan Oscillator smooths the gap between bullish and bearish candles. It works much like the standard MACD indicator.
McClellan Oscillator
XAU/USD Analysis and How to Generate Trading Signals
This Oscillator is a momentum indicator which can be transacted in the same way as the MACD indicator. There are 3 methods that McClellan Oscillator indicator can be used to generate trading signals.
Zero Center Line Cross over Signals:
Bullish Signals- When oscillator crosses above zero centerline a buy signal is given.
Bearish Signals- When the oscillator crosses below zero center line a sell signal is generated.
Technical Analysis in XAU/USD Trading
Divergence Trade Setup Signals:
Looking for divergences between the McClellan Oscillator and price can prove to be very effective in spotting potential reversal and/or trend continuation points in price movement.
There are different types of divergences:
Classic Trade Divergence ( Regular Trade Divergence )
- Bullish Divergence: Lower lows in price action & higher lows in the McClellan Oscillator.
- Bearish Divergence: Higher highs in price & lower highs in the McClellan Oscillator.
Hidden Divergence Trading Setup
- Bullish Divergence: Higher lows in price action & lower lows in McClellan Oscillator.
- Bearish Divergence: Lower highs in price action and higher highs in McClellan Oscillator.
Overbought/Oversold Levels on Indicator
The McClellan Oscillator is also used to identify the potential over-bought and oversold levels in price action movements. The over-bought and oversold conditions are generated/derived when oscillator moves to extreme levels on one side and starts to turn, however, in a strong trending market the oscillator will stay in the over-bought and oversold levels for a long time. It's not recommended to trade over-bought & oversold levels to generate trade signals. Best signal to use is the Center Line cross over signals to generate signals.
Get More Tutorials:
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- Engaging with XAUUSD Patterns for Effective Analysis
- Short-Term & Long-Term XAU/USD with Moving Averages
- The McClellan Oscillator Indicator as a Technical Tool for Generating Buy Trading Signals
