price oscillator(ppo)

The price oscillator is used to measure the momentum based on two moving average,the "fast" and the "slow" moving average thus considered to be the same as MACD.
price oscillator  is also called percentage price oscillator(PPO).

Price oscillator is an oscillator and therefore has an oscillation at point 0.00.

Price oscillator is based on centerline and divergence.

Since price oscillator is considered to be the same as MACD and is based on two moving average,it therefore follows that the difference between the two moving average divided by the slow moving average multiplied by 100 will give the price oscillator formula as follows;

PPO(Price oscillator)= {(Fast moving average-slow moving average)/slow moving average}*100


Since price oscillator is based on centerline and it has an oscillation at point 0.00,it therefore follows that when the price oscillator curve rises above 0,that will be an indication of an upwards market thus the trading should be trading in an upwards direction while when the price oscillator curve falls below 0 that will be an indication of a downwards market thus the trader should be trading in a downwards direction.

Since price oscillator is also based on divergence,it therefore follows that when the price oscillator curve is trending upwards while the market is moving downwards,the market will experience a reversal and start moving in the same direction upwards as the price oscillator.On the other hand,when the price oscillator curve is trending downwards while the market is moving upwards,the market will experience a reversal and start moving in the same direction downwards as the price oscillator.This is indicated as from the candle sticks chart below;




From the candle sticks chart above,there are 3 points,point A,B and C.Point A and B represent divergent points while point C is the price oscillator(PPO).
At point A,the market was moving upwards while the price oscillator curve was moving downwards.The market then reverse and start moving in the same direction downwards as the price oscillator curve.This will signal the trader to be trading in a downwards market at point A.
On the other hand,at point B,the market was moving downwards while the price oscillator curve was moving upwards.The market then reverse and start moving in the same direction upwards as the price oscillator curve.

Recommendation:If you are a day trader just use 1 min,5 min,15 min and 30 min timeframe while if you are a swing trader just use 1 hour and above timeframe if you want price oscillator indicator to work well for you


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