Ultimate Oscillator Trading Analysis and Ultimate Oscillator 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 indicators.
- Leading - some indicators lead the market & give signals earlier than the optimum time
- Lagging - some 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 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 plots these values a scale ranging from 0 to 100. Values of above 70 are considered to be overbought levels while values of below 30 are considered to be oversold levels.
The time periods used to calculate the ultimate oscillator 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 signals using various 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
Overbought/Oversold Levels on Indicator
Overbought - levels above 70 - sell signal
Oversold - levels below 30 - buy signal
Divergence Trading
The oscillator also can be used to trade divergence signals, below is an example of a classic bearish divergence signal.
Technical Analysis
