Return the value of “Chande Momentum Oscillator” technical indicator.

Syntax:

Calculation :

pos positive variation, pos = 0 if variation is negative

neg negative variation, pos = 0 if variation is positive

variation = pos – neg

We calculate Mpos and Mneg the moving average with p days of pos and neg.

Chande momentum oscillator = (Mpos – Mneg) / (Mpos + Mneg) * 100

Interpretation :

This indicator is similar to the RSI indicator.

Buy signals occur  generally when crossing the -50 level and sell signals when crossing the +50 level.

Chande is always scaled between -100 and 100 (bounded indicator).

 

It can also give good divergence signals.

A bullish divergence occurs when the stock price makes new lows while the chande fails to make new lows.

A bearish divergence occurs when the stock price makes new highs while the chande fails to make new highs.

We can apply a moving average on this indicator to smooth it.

 

Example:

Related entries

Share this