The ATR and Volume adjusted momentum oscillator include a ratio made of 2 double smoothed exponential average of the momentum compared to the absolute one.
The AbsMtm is a calculation of the momentum weighted with Volumes. So this technical indicator should be used on a security that deals with Volumes.
Trading signals can be compared to the MACD, the main oscillator is in histogram, while the signal line is a curve. Bullish and bearish signals are made with cross over and cross under the histogram and the signal line. You can also wait for the histogram to cross the 0 line which represents the frontier between the buyers and the sellers.
Translation of a MetaStock code by a request in the Spanish forum.
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//PRC_ATR&Volume adjusted Momentum | indicator //30.05.2017 //Nicolas @ www.prorealcode.com //Sharing ProRealTime knowledge //translated from Metastock code // --- settings //avgP=10 //avgType=0 //moving average type //p1=5 //p2=30 //momp=5 //--- end of settings Mtm = (Close - close[momp] )/AverageTrueRange[momp] AbsMtm = (abs ( mtm)+ abs(Volume-volume[momp])) NumE = exponentialaverage[p2](exponentialaverage[p1](mtm)) DenE = exponentialaverage[p2](exponentialaverage[p1](absmtm)) Bensu = 100*(NumE/DenE) //Volume Change Volwma=WeightedAverage[13](Bensu) //signal line signal=average[avgP,avgType](volwma) if volwma>0 then r = 100-(volwma)*2 g = 150+abs(volwma)*2 else r = 150+abs(volwma)*2 g = 100-abs(volwma)*2 endif RETURN volwma coloured(r,g,0) style(histogram) as "VOLUME ADJUSTED MOMENTUM", signal style(line,2) as "Signal line" |
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Volume on currency crosses?
The featured image of the post do not deserve the indicator you are right, I attached other examples on US500.
The Volume weight is only an addition in the indicator formula, so as you stated it works also on instruments with no Volume.
When I buy and when I sell ?
It is described in the post already 🙂 The BUY/SELL signals are quite similar of what you can get with a MACD for instance.