Definition:

The Price Oscillator (also called the "Percentage Price Oscillator" – PPO) is designed to highlight the overall price trend and is displayed on the chart as a histogram. The PPO is calculated similar to the Moving Average indicator and is calculated by averaging two moving averages.

Background:

The normal filter setting is a 10 and 21 period simple moving average to determine its histogram.

Practical Use:

Traders can use the Price Oscillator a number of ways. The most basic is to go long when the Price Oscillator rises from below zero to above zero and/or sell/short a security when the oscillator goes back below zero. Some traders use the PPO to help identify the strength of a particular trend. The more extended the histogram reading is from zero, the more powerful the trend has become. Traders will also us this oscillator to help confirm the end of a particular trend. Identifying a divergence between the histogram and price action can signal a change in trend.

The signals provided by Price oscillator are typically the most meaningful when the price and volume of the chart being analyzed have also set up a bullish or bearish pattern. Using the Price Oscillator for additional confirmation of what has already been "read" in the chart can be a powerful addition to the assessment tools used by a technical analyst.

Definition:

The Momentum oscillator shows the speed/acceleration (or rate of change) of price action. This study is often used to indicate overbuying and overselling. A positive reading indicates overbuying and a negative reading indicates overselling.

Background:

Traders will also use the Momentum oscillator to look for divergences against price action to signify possible reversals.

Practical Use:

A bullish signal is generated when the indicator bottoms and turns up. A bearish signal is generated when the indicator peaks and turns down. The signals provided by Momentum oscillator, are typically the most meaningful when the price and volume of the chart being analyzed have also set up a bullish or bearish pattern. Some traders may use the Momentum oscillator as a leading indicator. For example, let's assume that price action is identified as being very bullish; the Momentum oscillator will climb sharply too. But when it diverges from price action expect a sentiment change in price action. Similarly, when price action is bearish, the Momentum oscillator should be dropping too. Look for a divergence (upward push) in the Momentum oscillator to indicate a trend reversal.

Using the Momentum Oscillator for additional confirmation of what has already been "read" in the chart can be a powerful addition to the assessment tools used by a technical analyst.

Definition:

Percent "R" is a momentum indicator measuring overbought and oversold levels and compares the price action's close to the high-low range over a defined period of time, typically 14 days. This indicator is also called the "Williams %R."

Background:

The Percent"R" has a mathematically similar outcome when plotted on a chart to the "Stochastic" indicator. There are two differences between the two. The Stochastic indicator is plotted from 0 to 100 and the Percent"R" is plotted from 0 to -100. The second difference is that the Stochastic indicator has internal smoothing.

Percent"R" was introduced by Larry Williams.

Practical Use:

Traders usually consider price action over 80 being oversold and under 20 overbought.

When using Percent "R" in technical analysis, both the entry and exit signals are assessed by most analysts in context with both price and volume of the chart being analyzed.

Definition:

The Choppiness Indicator (CI) is a function of price direction and measures the direction or trend of price action. Price action that is trending well has a lower Choppiness Index number and price action not trending tends to have higher CI numbers.

Background:

The Choppiness Index ranges between 1 and 100. Again, the higher the index reading the "choppier" the price action is; the lower the index reading the better the chance that price is in an established trend.

The CI has an inverse association to price. The CI considers a trend broken when index reading is below the lower line and pivots.

The CI is developed based on computerized fractal geometry. Traders tend to consider a CI value above 61.8 as high. A CI value below 38.2 is considered low indicating that price is in a trend.

The CI is much like the ADX (also designed to evaluate the strength of a current trend and to determine whether a market is trending or moving sideways). E.W. Dreiss introduced the CI and believes his indicator is superior because it may help a trader stay in a trending market and out of whipsaw prone times in volatile price action periods.

Practical Use:

Traders tend to us the CI as a sell indicator. One of the more crucial times of trading is when to exit a trade. When the CI is low signaling a healthy trend, traders will read a pivot, normally below 38.2, as a signal to exit the trade—especially if the CI reading rises above 38.2. This is often times considered the end of the current trend.

The Choppiness Indicator can provide the technical analyst with both entry and exit signals. These signals are typically the most meaningful when the price and volume of the chart being analyzed have also set up a bullish or bearish pattern. Using the Choppiness Index for additional confirmation of what has already been "read" in the chart can be a powerful addition to the assessment tools used by a technical analyst.