PMOX Indicator

Creator : Definedge

The XO Zone indicator is a point-and-figure chart indicator developed by Prashant Shah.

The indicator is designed using the X, O, and vertical column properties of the Point & Figure chart.

The PMOX is a momentum indicator as well as an oscillator. It helps to identify strong trends and pullback trade opportunities.

In the PMOX indicator, there are two types of dots: green and red.

One of the problems with many oscillators is that they remain overbought even when the market trend is strong. PMOX addresses this issue.

The PMOX measures the strength of the short-, medium-, and long-term trend of the price. In addition, it measures the strength of recent swings in the price.

PMOX indicator levels of 75 and 25 are extreme.

The green dot above 75 indicates strong momentum in the price. When the price crosses the high of the green dot column, it indicates a strong continuation breakout. A stop-loss can be placed at the double bottom of a sell pattern.

The green dot below 25 indicates that price is down in the short-term and there is a pullback trade opportunity. When the column reverses, a bullish trade can be initiated. Stop-loss orders can be placed at the bottom of the green dot column.

The red dot below 25 indicates strong bearish momentum. When the price falls below the low of the red dot column, it indicates a strong bearish continuation breakout. It is possible to set a stop-loss at the double top buy pattern.

Price is up in the short-term and there is a bearish pullback trade opportunity with the red dot above 75. When the column reverses, a bearish trade can be initiated. It is possible to place a stop-loss above the high of the red dot column.

You are supposed to develop your own observations of this indicator based on these readings. PMOX can also be used in conjunction with any other indicator or pattern. In the context of a trading system, it can serve as a decent component.

Prashant Shah introduced this indicator in his book on Relative Strength, available for free on Shelf.

Click here to learn more about this indicator.

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.

This indicator is also available in the System Builder on RZone & TradePoint. 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.