Chande Momentum Oscillator


Function Name: cmo

Tags: Oscillator

Category: Momentum

The CMO is looking for extreme overbought and oversold conditions. There are two different ways that this oscillator is used as a trading signal. The first is to measure overbought (greater than 50) or oversold (less than -50) levels. The second method is to buy when the oscillator crosses above its moving average line and to sell when the oscillator crosses below its moving average line.

The Chande Momentum Oscillator is constructed using the sum over a given period of price changes on up days and the sum over the same period of prices on down days.

As mentioned above the overbought levels are quantified at +50 and the oversold level at -50.

At +50, up-day momentum is three times the down-day momentum. Likewise, at -50, down-day momentum is three times the up-day momentum.

These levels correspond to the 70/30 levels on the RSI indicator.

Furthermore, the overbought/oversold entry and exit rules can be established by plotting a moving average trigger line on the CMO. For example, if the default 20-period CMO is used, a 9-period moving average may serve as a good trigger line. When CMO crosses above the 9-period trigger line a buy signal is generated; when it crosses below a sell signal is generated.


Author:   Tushar Chande






Default Value: 21  |  Minimum: 1  |  Maximum: 9999


Type: Numeric



Default Value: 0


Type: Boolean



Default Value: -1


Type: Boolean