Hull Butterfly Oscillator

Hull Butterfly Oscillator (HBO) measures momentum as the difference between a Hull Moving Average and a second version computed with its coefficients flipped horizontally — chart the two weighting sets together and they trace the butterfly the name refers to. Compared with the usual shortcut of subtracting an HMA from a simple, exponential, or weighted average, this construction is designed for a more structured impulse response, keeping the oscillator's behavior cleaner across frequencies. Adaptive levels derived from the cumulative mean of the oscillator's absolute value frame stretched readings, and dots mark turns beyond them.

How to Trade the Hull Butterfly Oscillator?

• Oscillator sign: above zero reads bullish, below zero bearish — the fastest trend gauge the pane offers.
• Red dot: the HBO turns down while above the upper level — an overbought push losing its momentum.
• Green dot: a turn up below the lower level — potential exhaustion of the downside.
• Divergences: a fresh price extreme without a matching HBO extreme warns that the push is thinning.

As with other momentum tools, the dots are exhaustion flags rather than complete signals. The levels adapt to the oscillator's own magnitude, so a dot means stretched relative to this market's recent behavior, not an absolute threshold borrowed from another chart.

Hull Butterfly Oscillator Settings

• Length: how many past price inputs feed the calculation — shorter is faster and noisier, longer smoother and slower.
• Levels Multiplier: pushes the reversal levels further from zero; higher values mean fewer, more selective dots.
• Src: the price source the oscillator runs on, such as closing or opening prices.

Frequently Asked Questions

Why flip the Hull coefficients instead of subtracting two averages?

Differencing two ordinary moving averages inherits the quirks of both filters. Mirroring the Hull coefficients produces a difference with a more structured impulse response, which is the design goal — less unwanted behavior in the frequency domain than the conventional constructions.

Can I pair it with a trend filter?

Yes — the reversal dots benefit from directional context. A channel tool such as HyperTrend can supply the trend estimate while the HBO times stretched readings within it.

Do I need a subscription to use it?

No. The Hull Butterfly Oscillator is one of the LuxAlgo Library's free indicators, and the same page launches it inside Quant, LuxAlgo's AI, whenever you want to watch the dots print in real time.