Dynamic Median Momentum Oscillator

The Dynamic Median Momentum Oscillator indicator identifies market momentum and potential exhaustion by calculating the distance between price and a rolling median basis.

Usage

The Dynamic Median Momentum Oscillator can be utilized to identify trend shifts and mean reversion opportunities. Traders typically look for the following signals:

• Momentum Shifts: Observe the Smooth MCD (white line) crossing the Signal line (orange line). A cross above indicates bullish momentum, while a cross below indicates bearish momentum.
• Mean Reversion: When the oscillator reaches extreme levels (standardized at +/- 300) and begins to return toward the zero line, reversion triangles appear. These markers suggest the price may be overextended and could return to its historical equilibrium.
• Trend Context: Values consistently above the zero line suggest an uptrend, while values below suggest a downtrend. The "Super Slow" mode provides a filled zone for a clearer visualization of long-term trend direction.

Details

The core of this tool is the Dynamic Median basis, which uses a rolling median of the HLC3 price to establish a "fair value" line. Unlike a simple moving average, the median is less sensitive to extreme price spikes, making the resulting oscillator more robust against outliers.

To ensure the oscillator remains readable across different assets, the raw difference between price and the median is standardized by the average candle range (EMA of High-Low). This normalization allows for the use of fixed thresholds (e.g., +/- 200, 250, 300) regardless of the asset's price or volatility.

Settings

Parameters

• Basis Length: The lookback period used to calculate the rolling median basis.
• Smoothing Length: The EMA length applied to the raw oscillator to create the Smooth MCD line.
• Signal Length: The EMA length used to calculate the signal line for momentum crossovers.
• Standardize: When enabled, normalizes the oscillator by the average candle range to allow for fixed overbought/oversold zones.

Display

• Oscillator Display Mode: Selects the visible components:
  • All: Shows histogram, lines, and fills.
  • Fast: Shows only the histogram.
  • Slow: Shows the Smooth MCD and Signal lines.
  • Super Slow: Shows a simplified filled zone representing trend direction.

FAQ

How do I use the overbought and oversold levels?

Enable the "Standardize" setting to use the fixed levels of +/- 200, 250, and 300. These zones indicate varying degrees of price extension relative to the median.

What is the benefit of using a median instead of an average?

A median is mathematically more robust against price outliers and sudden spikes, providing a "fair value" baseline that is less distorted by extreme volatility than a standard moving average.

How can I access this indicator?

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