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The Price Oscillator is the difference between two moving averages, expressed in either points or percentages.While the Price Oscillator is based on the same idea same as the MACD, but the Price Oscillator can use any two moving averages. (The MACD uses 12 and 26 day MAs only.) The Price Oscillator generates a buy signal if the shorter of the 2 moving averages (or some prefer the security price - a "1 day" MA!) goes above a longer moving average. A sell signal is generated if the shorter MA goes below the longer moving average. Many day trading experts use price oscillators of one form or another as they can be calculated quickly, and are generally quite reliable (although like the MACD, they can suffer from whipsawing). To calculate the Price Oscillator in points, simply subtract the longer MA from the shorter. To calculate it in percentages, take the longer MA from the shorter moving average, divide by the short MA, and multiply the whole thing by 100. |
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