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Creator: Larry Williams
By calculating the difference between today’s high, low, and close price and the previous session’s close price, the ultimate oscillator measures the buying pressure and the true range. In order to calculate the ultimate oscillator, the buying pressure and true range are smoothed and weighted.
We plot two lines on the chart when we plot the ultimate oscillator.
1 – the green line is an ultimate oscillator
2 – the red line is its average line
The ultimate oscillator oscillates between 0 and 100. Indicators above the average line are considered bullish, while those below the average line are considered bearish. An oscillator above 70 indicates a zone of overbought conditions, whereas an oscillator below 30 indicates a zone of oversold conditions.
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 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.
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.