Chande Momentum Oscillator

DEFINITION of 'Chande Momentum Oscillator'

A technical momentum indicator invented by the technical analyst Tushar Chande. It is created by calculating the difference between the sum of all recent gains and the sum of all recent losses and then dividing the result by the sum of all price movement over the period. This oscillator is similar to other momentum indicators such as the Relative Strength Index and the Stochastic Oscillator because it is range bounded (+100 and -100).

BREAKING DOWN 'Chande Momentum Oscillator'

The security is deemed to be overbought when the momentum oscillator is above +50 and oversold when it is below -50. Many technical traders add a nine-period moving average to this oscillator to act as a signal line. Bullish signals are generated when the oscillator crosses above the signal, and bearish signals are generated when the oscillator crosses down through the signal.

RELATED TERMS
  1. Oscillator

    A technical analysis tool that is banded between two extreme ...
  2. Stochastic Oscillator

    A technical momentum indicator that compares a security's closing ...
  3. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used ...
  4. Signal Line

    A moving average plotted alongside a technical indicator and ...
  5. Countertrend Trading

    A type of swing-trading strategy that assumes a current trading ...
  6. Williams %R

    In technical analysis, this is a momentum indicator measuring ...
Related Articles
  1. Trading

    Exploring Oscillators and Indicators: Stochastic Oscillator

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The stochastic oscillator is another well-known momentum indicator used in technical analysis. The idea behind this indicator ...
  2. Markets

    Use The Percentage Price Oscillator: The "Elegant Indicator" For Picking Stocks

    Technical analysis is basically an attempt to disprove the credo that "Past performance is not indicative of future results." The percentage price oscillator, which measures momentum, is among ...
  3. Trading

    How To Profit From The "Night and Day" Aroon Oscillator

    “Aroon” is a Sanskrit word loosely translated as the transition from night to day, appropriate for a measure that attempts to determine when a trend is about to develop into something of substance. ...
  4. Trading

    Exploring Oscillators and Indicators: Conclusion

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The goal of every short-term trader is to determine the direction of a given asset's momentum and to attempt to profit from ...
  5. Managing Wealth

    The Top Technical Indicators For Commodities Investing

    Traders can use "the usual suspects" (standard indicators for trend trading) when it comes to choosing indicators for investing in commodities. Here's how.
  6. Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  7. Trading

    Exploring Oscillators and Indicators: Leading And Lagging Indicators

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com Indicators can be separated into two main types - leading and lagging - both differing in what they show users. Leading ...
  8. Trading

    MACD And Stochastic: A Double-Cross Strategy

    The stochastic oscillator and the moving average convergence divergence (MACD) are two indicators that work well together.
  9. Trading

    Overbought Or Oversold? Using The RSI To Find Out

    The Relative Strength Index is a technical indicator that measures the velocity and magnitude of changes in a stock’s price.
  10. Trading

    Divergences, Momentum And Rate Of Change

    Divergences may signal a change in market direction, but traders must also identify the speed of that change.
RELATED FAQS
  1. How do I build a trading strategy with the Chande Momentum Oscillator?

    Learn about the concepts behind Tushar Chande's momentum oscillator, including some simple steps you can use to help build ... Read Answer >>
  2. How do you know where on the oscillator you should make a purchase or sale?

    Learn more about oscillator indicators, technical momentum measures that are used by traders to predict potential market ... Read Answer >>
  3. What are the most common momentum oscillators used in day trading?

    Take a look at some commonly used momentum oscillators that can also be used for intraday trading, such as stochastic oscillators ... Read Answer >>
  4. Why is the Ultimate Oscillator important for traders and analysts?

    Understand the thinking behind the design of the ultimate oscillator and learn the primary trading signals that it generates ... Read Answer >>
  5. What precisely is a stochastic oscillator meant to predict?

    Gain a basic understanding of the stochastic oscillator and how this technical indicator is designed to predict reversals ... Read Answer >>
  6. How do I use Stochastic Oscillator to create a forex trading strategy?

    Learn about the stochastic oscillator and how to it is used to create an effective forex trade strategy, including how to ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center