Eine solche Formation wäre ein klares Buy-Signal, während invertierte und vertikal umgedrehte Formation als Sell-Signal dienen würde. You can gather the same information from a price chart with a quick look. PPO is positive when the shorter moving average is above the longer moving average. They are a 'cute' way of measuring the 'speed' of a price move.
The fact that the PMO remains above the zero line testifies to the strength of the price move; however, minor zigzags in price movement cause the PMO to whipsaw above and below its EMA, generating many unprofitable crossover bull signals. This chart also shows how sideways wiggle ultimately will end and how it can offer subtle clues that the end of the trend is near. When we see this classic formation, it offers additional reassurance that a tradable top is in place.
We start looking for this formation when the PMO has become relatively overbought and the price index has experienced a substantial move up. This formation doesn't always occur at tops, but, when it does, it helps build our confidence in the reliability of the signal. The first action is a false PMO top. The false top alerts us that a price top is probably just a few weeks away.
When these signals occur at very overbought levels, they may tentatively be taken at face value, but, when they have been preceded by very strong price action, it is possible for prices to make yet another new high, which causes the PMO to begin rising again.
Note that an important aspect of this analysis is that the price index has broken a rising trend line in conjunction with the bear kiss. While the bull kiss and bear kiss are essentially equal but opposite formations, price behavior between the two is different. Normally, the bear kiss is a non-confirmation which coincides with the final price high in a rally; whereas, the bull kiss normally coincides with a higher price low in a new rally.
While the bull and bear kiss formations are quite common, it is also possible to have very clean PMO reversals and crossovers without any of the gyrations associated with blow-offs and retests because the change in price trend is relatively smooth.
The point is that reversals and crossover actions can cover a wide range of configurations. A study of the charts will lead to a better understanding of the kind of price action that begets a certain type of PMO behavior.
The PMO behavior also gives clues as to what kind of price behavior to expect. It can also be used to determine price reversals using bull and bear crossovers.
The default settings use a 35 period and 20 period EMA with a 10 period EMA signal line, but users can opt for a shorter timeframe to produce a more sensitive oscillator or a longer timeframe to produce a less sensitive oscillator.
Once selected, the indicator can be placed above, below or behind the underlying price plot. The stock's PMO must have been rising for the last three days, but has not yet crossed over its signal line.
This scan is meant as a starting point for further analysis and due diligence. You can see that the speed of the price move is slowing. This is all an oscillator is showing. Hey Jules thanks for sharing. Many people use oscillators in different ways and you are correct to say that they can "measure the speed of a move", but that's not all they show. Just price action and the RSI oscillator as you can see. Now let's read this correctly. At the same time we have an overbought reading on the RSI plus a clear bounce of the 70 level, giving us the reversal confirmation.
RSI broke through the descending trend line while in oversold levels and bouncing from the 30 level.
This gives us reversal and breakout confirmation. Any ideas on how to use the readings now? This is just how many traders use this tool as confirmation on their analysis. If you want to get more experience using them I suggest you and everybody else to post their charts here!
After this graph u shown, i would say, not sell, wait until it goes a little more down, or a little even further up, first sell if it takes another breakpoint down, then keep close eye, and then buy after the next upward breakpoint. But, if this was a stock, and not a forex i wouldnt sell.
Sry for OT but how the hell you got 10k views on the Thread? That is quite clear - Orlando is celebrity! Not a celebrity Fisky, just a regular chartist wink. I will follow yor blog. Sorry don't mean to answer the question to Orlando. I used both of them a year ago. RSI to determine trend strength: Stoch was more of a buy sell signal. Once trend identified on larger time frame i would buy if resistance and 80 on stoch was broken.
Sell in case of break of support and below Hey Gio, thanks for posting here. I do have stochastichs on my lower time frame charts but I only use it to get better entries, nothing more. Hey guys, Do any of you use the ATR? Like i said in the trending indicator thread i am doing some research because i want to make a new mechanical trading system of my own.
This is not the case for the MACD. Despite its advantages, the PPO is still not the best oscillator to identify overbought or oversold conditions because movements are unlimited in theory.
Levels for RSI and the Stochastic Oscillator are limited and this makes them better suited to identify overbought and oversold levels. The PPO can be set as an indicator above, below or behind a security's price plot. Once the indicator is chosen from the dropdown list, the default parameter setting appears 12,26,9.
These parameters can be adjusted to increase or decrease sensitivity. A slower long moving average combined with a faster short moving average will increase sensitivity. The histogram can be removed by setting the signal line parameter to 1. This is helpful when displaying the PPO behind the price plot of a security. Click here for a live example of the PPO. This scan reveals stocks that are trading above their day moving average and have a bullish signal line crossover in the PPO.
Also, notice that the PPO is required to be negative to ensure that this upturn occurs after a pullback. This scan is just meant as a starter for further refinement. This scan reveals stocks that are trading below their day moving average and have a bearish signal line crossover in PPO.
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