Chande Momentum Oscillator (CMO) Indicator Strategy
Chande Momentum Oscillator Indicator Definition
The chande impulse oscillator (CMO) was matured by Tushar Chande and is a technical indicator that attempts to enamor the momentum of a surety. Chande discussed this and many some other indicators in his rule book "The New Technical Trader". The chande impulse oscillator indicator differs from other technical indicators like the RSI and MACD, because it uses risen and down days in some the numerator and denominator. Below is the formula for the chande momentum oscillator:
Chande Momentum Oscillator
Su is the sum of the remainder between today's close and yesterday's close. Sd represents the absolute value of the difference between today's private and yesterday's close on down days.
Chande Momentum Oscillator Overbought & Oversold Levels
The CMO indicator is a unparalleled oscillator, merely like all else oscillators, it has overbought and oversold levels. Since the indicator is supported previous closing prices, it will oscillate between +100 and -100. Traders apply a general rule of thumb that when the chande impulse oscillator is greater than +50 the security measures is said to Be overbought, while a interpretation below -50 is considered oversold. Traders should not simply buy or deal out a security because the indicator crosses these thresholds, this is a sure way to lose money.
Trading with the Chande Momentum Oscillator Strategy
Trading with the chande momentum oscillator American Samoa a standalone indicant can turn out a challenging task. Since the indicator will hover 'tween +100 and -100, a break of +50 could mean that it is overbought, but remember the indicator has another 50 points IT can run. What many traders come is to apply a self-propelling average to the indicator and testament use crosses of the CMO and a simple moving average out to generate trade triggers. Another approach is to trade a security when the chande momentum oscillator has reached extreme point readings. Extreme readings are an indication that a strong trend is in place, and traders will add to their positions happening any minor corrections.
Chande Impulse Oscillator Charting Example
The below chart is courtesy of CMS Forex.
Chande Impulse Oscillator Chart
POPULAR LESSONS IN THE COURSE: Momentum Indicators
Source: https://tradingsim.com/blog/chande-momentum-oscillator-cmo-technical-indicator/
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