Ultimate Oscillator Technical Trading Analysis and Ultimate Oscillator Technical Indicator Signals
Originally developed & used to trade stocks & commodities markets.
This oscillator aims at striking a balance between leading signals & lagging signals given by the common technical indicators.
- Leading - some indicators lead the market & give signals earlier than the optimum time
- Lagging - some technical indicators lag the market so far that half of the move is over before a signal gets generated.
This is the balance that the oscillator aims to strike, not to lead too much or lag too much - this way the oscillator trading will always give a signal at the ultimate time, thus its name.
This indicator uses three different n-number of candlesticks and calculates the combined weighted sums of price action from these candles and draws these values a scale ranging from 0 to 100. Values of above 70 are considered to be over-bought levels while values of below 30 are considered to be over-sold levels.
The time periods used to calculate the ultimate oscillator trading are 7 periods (short term trend), 14 periods (intermediate term trend) & 28 periods (long term trend).
Analysis and How to Generate Signals
This technical indicator can be used in generating buy and sell trading signals using various different methods.
Center line Trading Cross-over Signal
Buy Signal - values above 50 center-line level
Sell Trading Signal - values below 50 center-line level
Center line Trading Cross-over Signal
Over-bought/Oversold Levels on Technical Indicator
Over-bought - levels above 70 - sell trading signal
Oversold - levels below 30 - buy signal
Divergence Trading
The oscillator trading also can be used to trade divergence setups, below is an example of a classic bearish divergence setup.
Technical Analysis
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