Chande Momentum Oscillator + WaveTrend Oscillator

The Chande Momentum Oscillator + WaveTrend Oscillator indicator combines two powerful momentum-based oscillators into a single tool to help traders identify trend exhaustion, potential reversals, and momentum shifts.

Usage

This script displays two primary components: the Chande Momentum Oscillator (CMO) with its signal line, and the WaveTrend Oscillator. Traders can use these components in tandem to find high-probability entry and exit points.

• CMO Overbought/Oversold: A potential selling point occurs when the CMO rises above the upper red dotted line (+50). Conversely, a buying opportunity may exist when the CMO falls below the lower green dotted line (-50).
• CMO Crossovers: Use the crossover between the CMO (green line) and its signal line (red line) to identify momentum shifts. A cross above the signal line is bullish, while a cross below is bearish.
• WaveTrend Confirmation: The WaveTrend line (blue) serves as a secondary confirmation. A robust buy signal occurs when the WaveTrend line is above the center line and the CMO has crossed over its signal line. A sell signal is indicated when the WaveTrend line is below the center line and the CMO is under its signal line.

Details

The indicator calculates the Chande Momentum Oscillator by measuring the difference between the sum of all recent gains and the sum of all recent losses, then dividing by the total of all price movement over the same period. This results in a value between -100 and +100.

The WaveTrend component is based on the concept of calculating the relationship between the price and its exponential moving average, adjusted by the mean absolute deviation. This helps in smoothing out market noise while identifying cycles in price action. By overlaying both, the indicator aims to filter out false signals provided by a single oscillator.

Settings

WaveTrend Settings

• Channel Length: Determines the period used for the initial EMA and deviation calculations in the WaveTrend component.
• Average Length: Sets the smoothing period for the WaveTrend calculation.
• RSI Source: The price source used for the WaveTrend calculation (e.g., Close, Open, High, Low).

Chande Momentum Settings

• Chande Momentum Length: The lookback period used to calculate the CMO gains and losses.
• Chande Momentum Signal: The length of the Simple Moving Average (SMA) applied to the CMO to create the signal line.

FAQ

How do I access Chande Momentum Oscillator + WaveTrend Oscillator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

What do the horizontal lines represent?

The horizontal lines at +50 and -50 represent overbought and oversold thresholds for the CMO, while the 0 line represents the equilibrium point for both oscillators.

Can I use this for any timeframe?

Yes, the indicator is designed to be versatile across various timeframes, though users should adjust the lengths in the settings to better suit specific asset volatility or trading styles.