AS Chakravarthy NCFM Academy Hyderabad for Stock Market Technical Analysis : Price Oscillator
Stock Market Technical Analysis Classes in Hyderabad Ameerpet,
The Price Oscillator displays the difference between two moving averages of a security's price. The difference between the moving averages can be expressed in either points or percentages.
The Price Oscillator technical indicator can suggest areas of overbought and oversold conditions as well as attempting to confirm bullish or bearish price moves.
The Price Oscillator is very similar to MACD employs two of MVs varying lengths to identify trend direction and duration. Then, MACD takes the difference in values between those two Moving Averages and an EMA of those Moving Averages and plots that difference between the two lines as a circle graph which rotates above and below a center.TO KNOW OUR Stock Market Training Institute in Hyderabad Please Visit AS Chakravarthy NCFM Academy Hyderabad
The Three Major Components
a)The PPO Line
PPO Line is a result of taking a longer term
Exponential Moving Average and subtracting it from a shorter term EMA. The result is then divided by the longer term EMA and then multiplied by 100
The most commonly used values are 26 days for the longer term EMA and 12 days for the shorter term EMA, but it is the trader's choice.
1. The Signal Line
The Signal Line is an EMA of the PPO Line described in Component 1.
The trader can choose what period length EMA to use for the Signal Line however 9 is the most common.
2. The PPO Histogram
As time advances, the difference between the PPO Line and Signal Line will continually differ. The PPO graph takes that difference and plots it into an easily readable histogram. The difference between the two line rotates around a zero line.
When the PPO histogram is above the Zero Line, the PPO is considered positive and when it is below the Zero Line, the PPO is considered negative.
FINAL WORDS ON PRICE OSCILLATOR
The Price Oscillator indicator (PPO) is a very valuable indicator. Just like the MACD it takes two indicators and adds the aspect of momentums which is much more predictive. It is important to not lose sight of the similarities between MACD and PPO. They are almost the exact same. The only difference is that PPO's calculation is returned as a percentage.
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