Pretty Good Oscillator

Pretty Good Oscillator answers one question in portable units: how far has the close traveled from its own average, measured in typical bar ranges? The build follows the original recipe for the Pretty Good Oscillator — source minus its simple moving average, divided by a smoothed true range of the same length — so a reading of +3 means price sits about three average bars above its baseline on any instrument. The PGO line colors by sign, with a gradient fill to zero and dashed threshold lines.

How to Trade the Pretty Good Oscillator?

• Cross above the Upper Threshold (+3): displacement has reached the territory Johnson's long-term system treated as an upside breakout; the Bullish Breakout alert marks it.
• Cross below the Lower Threshold (-3): the mirrored downside condition, covered by the Bearish Breakout alert.
• Zero crosses: the source moved back through its baseline — the slower trend-side read, with alerts both ways.

Because the denominator is a true-range average, the thresholds keep one meaning whether the tape is quiet or wild — the reason to prefer it over a raw distance-from-average plot.

Pretty Good Oscillator Settings

• Length (default 89): lookback for both the baseline and the smoothed true range. The default is Johnson's long-term setting; dropping to 14 or 21 speeds the line up and adds noise.
• Source (default close): the series measured against its baseline.
• True Range Smoothing (default EMA): average type in the denominator; SMA is the variant, with modestly different readings.
• Upper Threshold (default 3) and Lower Threshold (default -3): the breakout levels, in smoothed true-range units — shorter lengths usually pair with tighter values.
• Gradient Fill (default on) plus bullish, bearish and level colors.

Frequently Asked Questions

How is PGO different from Bollinger %B?

Both normalize price's stretch, but with different rulers. Bollinger Bands measure it in standard deviations of the close, which ignore intrabar range and gaps; PGO divides by averaged true range, so gap-heavy or wide-ranging bars widen its denominator. The two agree often and disagree exactly when bar shape matters.

Why is the default length 89?

It is the length from Johnson's long-term formulation, applied to both the baseline and the true-range average. Nothing in the math privileges it — shorter-horizon traders commonly drop to 14 or 21 and tighten thresholds to match.

Is the oscillator bounded?

No — readings beyond the thresholds simply mark increasingly unusual extension. Whether that argues for joining the move or fading it is a strategy decision the indicator deliberately leaves open.