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Ultimate Oscillator

Classic momentum oscillator classic multi-timeframe

A momentum oscillator designed to capture momentum across three different timeframes.

Usage

Use to avoid the pitfalls of oscillators that are limited to a single timeframe. Buy signals are generated when there is bullish divergence between price and the indicator.

Background

Developed by Larry Williams in 1976, the Ultimate Oscillator uses weighted averages of three different timeframes to reduce the volatility and false signals common in other oscillators. It remains a staple for identifying divergence across short, medium, and long-term price action. — StockCharts ChartSchool

Parameters

  • timeperiod1 (default: 7): Short period
  • timeperiod2 (default: 14): Medium period
  • timeperiod3 (default: 28): Long period

Formula

\[ \text{BP} = \text{Close} - \min(\text{Low}, \text{PrevClose}) \\ \text{TR} = \max(\text{High}, \text{PrevClose}) - \min(\text{Low}, \text{PrevClose}) \]

Source