Friday, January 27, 2012 12:07:52 AM
ULT Indicator...with SLV
Ultimate Oscillator is a momentum oscillator designed to capture momentum across three different timeframes. The multiple timeframe objective seeks to avoid the pitfalls of other oscillators. Many momentum oscillators surge at the beginning of a strong advance and then form bearish divergence as the advance continues. This is because they are stuck with one time frame. The Ultimate Oscillator attempts to correct this fault by incorporating longer timeframes into the basic formula. Williams identified a buy signal a based on a bullish divergence and a sell signal based on a bearish divergence.
Calculation
There are quite a few steps involved in the Ultimate Oscillator (UO) calculation. This example is based on the default settings (7,14,28). First, calculate ***Buying Pressure (BP) to determine the overall direction of price action. Second, measure Buying Pressure relative to the True Range (TR). This tells us the true magnitude of a gain or loss. Third, create averages based on the three timeframes involved (7,14,28). Fourth, create a weighted average of the three averages.
Buying Pressure (BP) measures the level of the current close relative to the current low or prior close, whichever is the lowest. True Range (TR) measures the price range from the current high or prior close (whichever is highest) to the current low or prior close (whichever is lowest). Both Buying Pressure and True Range incorporate the prior close to account for possible gaps from one period to the next. Buying Pressure is then shown relative to the True Range by dividing the X-period sum of BP by the X-period Sum of True Range. Averages are created for 7, 14 and 28 periods. These numbers correspond with the default parameters. A weighted mean is then created by multiplying the shortest Average by 4, the middle Average by 2 and the longest Average by 1. These weighted amounts are then summed and divided by the sum of the weightings (4+2+1).
Ultimate Oscillator is a momentum oscillator designed to capture momentum across three different timeframes. The multiple timeframe objective seeks to avoid the pitfalls of other oscillators. Many momentum oscillators surge at the beginning of a strong advance and then form bearish divergence as the advance continues. This is because they are stuck with one time frame. The Ultimate Oscillator attempts to correct this fault by incorporating longer timeframes into the basic formula. Williams identified a buy signal a based on a bullish divergence and a sell signal based on a bearish divergence.
Calculation
There are quite a few steps involved in the Ultimate Oscillator (UO) calculation. This example is based on the default settings (7,14,28). First, calculate ***Buying Pressure (BP) to determine the overall direction of price action. Second, measure Buying Pressure relative to the True Range (TR). This tells us the true magnitude of a gain or loss. Third, create averages based on the three timeframes involved (7,14,28). Fourth, create a weighted average of the three averages.
Buying Pressure (BP) measures the level of the current close relative to the current low or prior close, whichever is the lowest. True Range (TR) measures the price range from the current high or prior close (whichever is highest) to the current low or prior close (whichever is lowest). Both Buying Pressure and True Range incorporate the prior close to account for possible gaps from one period to the next. Buying Pressure is then shown relative to the True Range by dividing the X-period sum of BP by the X-period Sum of True Range. Averages are created for 7, 14 and 28 periods. These numbers correspond with the default parameters. A weighted mean is then created by multiplying the shortest Average by 4, the middle Average by 2 and the longest Average by 1. These weighted amounts are then summed and divided by the sum of the weightings (4+2+1).
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