Momentum Oscillator Indicator
The Chande Momentum Oscillator (CMO) was developed by Tushar Chande. The CMO calculates the difference between all the recent gains and all recent foreign exchange losses and share it with the total absolute difference in price. The CMO is similar in operation much like the RSI and the momentum indicator. Many positive exchange rate differences indicate an uptrend and therefore high value CMO, the CMO of exaggeration is in overbought levels correctly.
Momentum Oscillator Indicator Signals
The Momentum Oscillator Indicator is useful to confirm trends and trend reversal points by divergences. The Momentum Oscillator Indicator is also used as an overbought / oversold indicator but the signals for this are less clear, here we recommend to use multiple indicators to signal validation.
Momentum Oscillator Indicator Trend Confirmation
If the Momentum Oscillator Indicator a longer time in a certain direction, for example, upward, it means that there are more positive than negative days, the trend is upwards and is thus confirmed among others by the Momentum Oscillator Indicator.
Divergences
In ascending peaks in the rate but declining peaks in Momentum Oscillator Indicator (negative divergence), the Momentum Oscillator Indicator a warning signal that the trend weakens. The uptrend will soon come to an end. The same applies of course also vice versa when a positive divergence at the end of a down trend.
The graph below we see a declining Momentum Oscillator Indicator but still a rising rate . The strength of the uptrend is weakening and ends in a break. Divergences are particularly powerful as they occur in the overbought / oversold zones. The EMA 9 can be used as signal line in order to steps.
About Intersections with EMA
Often, an EMA 9 subscribed to the values of the Momentum Oscillator Indicator a little more to be leveling off. At intersections between the Momentum Oscillator Indicator and EMA signals arise for beautiful trades, however, as seen in the graph below, the Momentum Oscillator Indicator in a short time often the EMA cross and there are also many small miss signal trades between. Momentum Oscillator Indicator above EMA buy, sell Momentum Oscillator Indicator under EMA.
Overbought / Oversold
The Momentum Oscillator Indicator 50 located at the top in the zone and below the overbought -50 oversold in the zone. It located in the area is not enough to have to trade directly. Leaving the zone still delivers nice signals to act, but rather use an additional indicator to signal confirmed.
Calculation Chande Momentum Oscillator
V = Last Price - Last price previous period
If V> 0, V = Cu, Cd = 0
If V <0 then V = Cd, Cu = 0 (the value of Cd is absolutely made)
Within the period (s):
TotCu = Sum of all the values Cu
TotCd = Sum of all values found Cd
CMO = ((TotCu - TotCd) / (TotCu TotCd +)) * 100
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