CMO

Chande's Momentum Oscillator

Shown below in the graph, Chande's Momentum Oscillator (CMO) is bounded from -100 to +100 much like other Momentum Studies such as Relative Strength Index and Stochastic.

You can see changes in net momentum using the 0 level as a balance point. Primary use of the CMO is to look for extreme overbought or oversold conditions.

 

Parameters: Period.

For additional help on what the different parameters mean, that isn't included on this page, click here.


Chande's Momentum Oscillator

Chande's Momentum Oscillator

Here is an example of the Chande's Momentum Oscillator chart study (on a London Stock Exchange graph)


Reading the study:

There are a couple of ways in which this chart study can be used:

Fristly, overbought signals can sometimes be generated when the CMO is above 50, indicating that there might be a fall on it's way. Vice versa, oversold signals can sometimes be generated when the CMO is below -50, indicating that there might be a rise on it's way. These are equivalent to the 70/30 levels used with the Relative Strength Index.

Secondly, the CMO is sometimes used in conjunction with a Moving Average (MA) set to a period of nine. Again using the same indicators.

 

Could also look for divergence of the CMO from the price level like in other Momentum Studies.


Reading the study:

Reading the study:

Here is an example of the Chande's Momentum Oscillator and the price line (of the London Stock Exchange), and what it may indicate




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