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Creator: Constance Brown
CMB Composite index is calculated on Welles Wilder’s RSI indicator. The RSI indicator oscillates between 0 and 100. CMB Composite index is an unbounded momentum indicator.
You will see three lines below the chart when you plot the CMB Composite index.
To plot CMB indicator, 9-period ROC of 14-period RSI indicator and 3-period Moving average of 3-period RSI is calculated. The sum of both of these is the CMB indicator line. 13-period average of this indicator line is a fast line and 33-period average is a slow line.
CMB indicator line can be compared with the RSI line. It can be used to read divergences with the RSI line. A rising CMB indicator line is bullish, while a falling line is bearish. When the fast line is above the slow line it indicates strong momentum.
The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.
The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.
This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.