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Ultimate Oscillator

Oscillators typically compare a security's (smoothed) price with its price x-periods ago. Larry Williams notes that the value of this type of oscillator can vary greatly depending on the number of time periods used during the calculation. Thus, he developed the Ultimate Oscillator that uses weighted sums of three oscillators, each of which uses a different time period.

The three oscillators are based on Williams' definitions of buying and selling "pressure."

The parameters for the Ultimate Oscillator are shown below. These parameters are specified at the time the indicator is plotted.

First Cycle. Enter the number of time periods in the short-term cycle.

Second Cycle. Enter the number of time periods in the intermediate-term cycle.

Third Cycle. Enter the number of time periods in the long-term cycle.

Interpretation :

Williams recommends that you trade following a divergence and a breakout in the Ultimate Oscillator's trend. A bullish divergence occurs when the security's price makes a lower low that is not confirmed by a lower low in the Oscillator. A bearish divergence occurs when the security's price makes a higher high that is not confirmed by a higher high in the Oscillator.

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