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How to trade with Chende momentum oscillator

Quick Summary of Chende momentum oscillator:

Daily trading tips: The Chande Momentum Oscillator is an advanced momentum oscillator. It is derive from linear regression. When CMO  Increasing high values. It may indicate that prices are trending strongly upwards. Increasing low values of CMO. May indicate that prices are trending strongly downwards. CMO is related to MACD and Price Rate of Change.

  • A Chande momentum oscillators identify the overbought and oversold.
  • It is reading bound in a range between -100 and +100,
  • The Chande momentum oscillator has a base value of zero.
  • When the oscillator is positive. Its Bullish signal are generated.
  • Bearish signals are generated when it is negative.
  • Cross 50 level it may generated sell signal.
  • Extremely overbought position can be identified at high levels, such as +50,
  • Extremely oversold positions might exist beyond -50. If this oscillator is complement with another indicator.

How to trade with Chende momentum oscillator:

  • It reaches the 50 level and CMO indicates overbought conditions.
  • When it reaches −50. it can also look for signals crossing above and below. A signal line composed of a 9-period moving average of the 20 period CMO.
  • CMO measures the trend strength. The higher the absolute value of the CMO. The trend while Lower absolute values of the CMO indicate sideways trading ranges.
  • CMO often forms chart patterns. Which may not show on the underlying price chart. Such as double tops and bottoms and trend lines. Also look for support or resistance on the CMO.
  • If price make a new high or low that is not confirmed by the CMO. The divergence can signal a price reversal.
  • Buy when cross 50 level.
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About Dwipen Gogoi

Dwipen Gogoi, MBA (IB and IT) and PGDFT from Pune. (Technical Analyst of AliceBlue) I am a You Tuber, Blogger and doing Technical Analysis last 10 years in Stock, Commodity and Forex Market. i am creating various trading strategies for day traders, swing traders, scalp traders.

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