McClellan Oscillator Oil Technical Analysis and McClellan Oscillator Signals

Developed by McClellan.

The McClellan Oscillator is an indicator that is based on smoothing the difference between the number of bullish candles & bearish candlesticks. This indicator looks similar to the traditional MACD.

McClellan Oscillator

Technical Analysis and How to Generate Signals

This Oscillator is a momentum indicator that can be traded in the same way as the MACD indicator. There are 3 techniques that McClellan Oscillator can be used to generate signals.

Zero Center Line Crossover Signals:

Bullish Signals- When the oscillator crosses above zero center-line a buy crude trading signal is given.

Bearish Signals- When the oscillator crosses below zero center-line a sell crude trading signal is given.

Technical Analysis in Oil Trading

Divergence 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 crude price movement.

There are several types of divergences:

Classic Oil Trade Divergence (Regular Oil Divergence)

• Bullish Divergence: Lower lows in crude price action & higher lows in the McClellan Oscillator.

• Bearish Divergence: Higher highs in crude price & lower highs in the McClellan Oscillator.

Hidden Oil Trade Divergence Setup

• Bullish Divergence: Higher lows in crude price action & lower lows in McClellan Oscillator.

• Bearish Divergence: Lower highs in crude price action and higher highs in McClellan Oscillator.

Oversold/Overbought Levels on Indicator

The McClellan Oscillator is also used to identify potential overbought and oversold levels in crude price action movements. The overbought and oversold conditions are generated when the oscillator moves to extreme levels on one side and starts to turn, however, in a strong trending market the oscillator will stay in the overbought and oversold levels for a long time. It is not recommended to trade overbought and oversold levels to generate crude trading signals. Best signal to use is the Center-line cross over signals to generate signals.