The Ultimate Oscillator is a powerful tool that combines three different momentum indicators, each focusing on varying timeframes: one week, two weeks, and three weeks. This unique approach helps traders get a clearer picture of market momentum.
To effectively use this indicator, you’ll need to set five input parameters:
- First Momentum Period - This is the timeframe for the first momentum calculation.
- Second Momentum Period - This sets the timeframe for the second momentum calculation.
- Third Momentum Period - This defines the timeframe for the third momentum calculation.
- Overbought Level - The threshold indicating that an asset may be overbought.
- Oversold Level - The threshold indicating that an asset may be oversold.
Calculation:
UltimateOsc = 100.0 * ((4.0*Avg1) + (2.0*Avg2) + Avg3) / (4+2+1)
Where:
Avg1 = SumBP1 / SumTR1
Avg2 = SumBP2 / SumTR2
Avg3 = SumBP3 / SumTR3
SumBP1 - The sum of bullish pressure over the First Momentum Period
SumTR1 - The sum of true range over the First Momentum Period
SumBP2 - The sum of bullish pressure over the Second Momentum Period
SumTR2 - The sum of true range over the Second Momentum Period
SumBP3 - The sum of bullish pressure over the Third Momentum Period
SumTR3 - The sum of true range over the Third Momentum Period
BP = Close - Minimum(Low, PrevClose)
TR = Maximum(High, PrevClose) - Minimum(Low, PrevClose)
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