Ultimate Oscillator


DEFINITION of 'Ultimate Oscillator'

A technical indicator invented by Larry Williams that uses the weighted average of three different time periods to reduce the volatility and false transaction signals that are associated with many other indicators that mainly rely on a single time period.

BREAKING DOWN 'Ultimate Oscillator'

This is a range-bound indicator, which means the value fluctuates between 0 and 100. Similar to the RSI, levels below 30 are deemed to be oversold, and levels above 70 are deemed to be overbought. Transaction signals are derived by finding situations where the price is going in opposite directions than the indicator. Once this divergence has been identified the trader will wait to confirm the transaction by using other technical indicators.

  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. Divergence

    When the price of an asset and an indicator, index or other related ...
  5. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
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  1. What is a common strategy traders implement when using the Ultimate Oscillator?

    The ultimate oscillator is an indicator that traders use to measure momentum across three time frames. Using three time frames ... Read Full Answer >>
  2. Why is the Ultimate Oscillator important for traders and analysts?

    The ultimate oscillator is considered an important technical momentum indicator because it seeks to provide more reliable ... Read Full Answer >>
  3. What are the best technical indicators to complement the Ultimate Oscillator?

    Technical indicators used to complement the Ultimate Oscillator include candlestick patterns and moving averages. Developed ... Read Full Answer >>
  4. What is the Ultimate Oscillator formula and how is it calculated?

    The formula for the Ultimate Oscillator is designed to compare short-, intermediate- and long-term price movements to show ... Read Full Answer >>
  5. What are the most common momentum oscillators used in day trading?

    Several momentum oscillators that are effective in daily or weekly trading are also effective in intraday trading, though ... Read Full Answer >>
  6. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>

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