Oscillator (OSC)

Type

Trend following Indicator

How does it work?

The oscillator displays the difference between two moving averages. It can be expressed as either points or as a percentage. ShareChart uses the percentage price oscillator.

A centreline crossover by the oscillator signals the shorter moving average crossing above or below the longer moving average. A 5% percentage price oscillator means that the shorter moving average is 5% higher that the longer moving average.

Trading Signals

The price oscillator is a trend following indicator, and thus can do an outstanding job of keeping you on the right side of the market during trending periods.

Keeping an eye on the price oscillator can provide buy signals, as when the oscillator passes through the zero centreline the short moving average has crossed the longer moving average, which may lead to trading opportunities.

Settings

Sharechart Default:  10 period, 15 period, 20 period

Example

The daily chart below is of the Australian company Genetic Technologies Ltd. The Oscillator indicator below the chart forms a bullish crossover on 28/04 and begins an up-trend at approx 30c and the share price rallies to above 80c before retreating to approx 60c where a bearish crossover is formed on 24/09. The share price enters a downtrend and re-treats even further to under 50c.

The setting for the Oscillator (OSC) for the graph above was 60 periods and 5 periods. It can be modified: go to Settings > Indicators > Oscillator (OSC).