Pz Oscillator is a sensitive index that offers a lot of useful information and automatically detects divergences. This instrument may be utilized as a confirmation when creating a transaction, as well as to determine the leadership of the trend and its own potency. The indicator has been developed as a complement to a number of our other trading instruments.
The oscillator draws two moving averages, revealing the direction of the trend. in the event the fast moving average is higher than the slow one, the trend is upward and you need to start a long position. Accordingly, when the fast moving average is lower than the slow one, the trend is downward and you need to open a short position.
Another way to determine the direction of the trend is to use the absolute value of the histogram. If the histogram value is above zero, the trend is upward. If the histogram value is below zero, the trend is downward.
Power (or speed) the trend is shown as a histogram. Blue bars indicate bullish momentum, red bars indicate bearish momentum. What to do with this information at any given time is determined by the market trend. If bullish momentum appears during a downtrend, it means that the trend has exhausted itself and the fall is slowing down. Accordingly, the appearance of a bearish impulse during an uptrend means a slowdown in growth.
The indicator automatically detects and shows normal and hidden divergences, and although all of them can be used to open a position, it is better not to do it immediately. For successful use of divergences, it is necessary to take into account the direction of the trend and its strength, mentioned above. The following signs clearly indicate a bearish divergence:
- The fast moving average of the oscillator is above zero
- The oscillator indicates an uptrend (the fast moving average is higher than the slow one)
- The oscillator shows a bearish momentum (red histogram)
- The oscillator detected a bearish divergence
Accordingly, the following signs clearly indicate a bullish divergence:
- Fast moving average of the oscillator below zero
- The oscillator indicates a downtrend (the fast moving average is lower than the slow one)
- The oscillator shows bullish momentum (blue histogram)
- The oscillator detected a bullish divergence
If you encounter one of these sets of signs, do not enter the market immediately. It is necessary to wait until the price confirms the readiness of the market for a reversal. Such confirmations may, for example, be:
- A reversal candlestick pattern
- Breakout at the price of the level
- Heiken Ashi
- Parabolic Sar
- And much more! The most important thing is to first of all wait for the market to move
- The main period and the averaging period are configurable
- Enabling / disabling normal divergences
- Enabling / disabling hidden divergences
- Enabling / disabling the oscillator lines
- The color and width of the lines are configurable
- Video and audio warnings about divergences, as well as email messages and push notifications are provided
- Video and audio alerts about the trend change, as well as e-mail messages and push notifications
The Pz Oscillator can serve as an excellent confirmation indicator when used with the following trading instruments:
Arturo Lopez Perez, private equity investor, stock speculator, programmer, and founder of Point Zero Trading Solutions.