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