Chande Momentum Oscillator

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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).

INVESTOPEDIA EXPLAINS '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. Indicator

    Indicators are statistics used to measure current conditions ...
  2. Overbought

    1. A situation in which the demand for a certain asset unjustifiably ...
  3. Oversold

    1. A condition in which the price of an underlying asset has ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Relative Strength Index - RSI

    A technical momentum indicator that compares the magnitude of ...
  6. Stochastic Oscillator

    A technical momentum indicator that compares a security's closing ...
RELATED FAQS
  1. How do I build a trading strategy with the Chande Momentum Oscillator?

    Tushar Chande developed several popular technical indicators and oscillators, including the momentum trading tool that bears ... Read Full Answer >>
  2. What technical tools can I use to measure momentum?

    One of the main goals of every trader using technical analysis is to measure the strength of an asset's momentum and the ... Read Full Answer >>
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