Chande Forecast Oscillator

What is the Chande Forecast Oscillator?

The Chande Forecast Oscillator, introduced by Tushar Chande, measures how far price sits from where a linear regression says it should be. Each bar, a regression line is fit to the last n closes and its forecast value for the current bar is taken; the oscillator is the close minus that forecast, expressed as a percentage of the close. Positive readings mean price is running above its own fitted trend, negative readings mean it is running below.

Because the forecast comes from the end of a least-squares fit, closely related to the LSMA, the oscillator behaves as a percentage deviation from the regression line: it crosses zero when price crosses the fit and stretches when a move outruns its own trend. A short moving average of the oscillator is often added as a trigger line.

How traders use it

• Zero-line crossings as short-term trend cues: turning positive is read as strength against the fitted trend and turning negative as weakness, with the caveat that flat markets produce constant whipsaw around zero unless a trend filter is added.
• Stretch readings as mean-reversion context: values that are large relative to the instrument's own recent history flag price extended from its regression fit, a condition that can resolve by pullback or by the trend simply re-accelerating.
• Trigger-line crossings for earlier signals: the oscillator crossing its own smoothed version typically fires before the zero cross does, at the cost of more noise.