What Is Chande Momentum Oscillator

This oscillator is similar to other momentum indicators such as the Relative Strength Index and the Stochastic Oscillator, except that it measures momentum on both up and down days. The oscillator also does not use smoothing, which makes it reach oversold and overbought levels more frequently. The indicator oscillates between +100 and -100.

Chande Momentum Oscillator Indicator

The Chande Momentum Oscillator is a Momentum and Oscillator indicator that uses momentum to identify relative strength or weakness in a market. An asset is deemed to be overbought when the Chande momentum oscillator is above +50 and oversold when it is below -50.

How To Calculate Chande Momentum Oscillator

Here’s how you can calculate the Change Momentum Oscillator

Formula:- Chande Momentum Oscillator= {(sHsL) / (sH+sL)}×100

where:

sH=the sum of higher closes over N periods

sL=the sum of lower closes of N periods

Why Use Chande Momentum Oscillator

The CMO is a technical indicator that identifies relative strength or weakness in a market. Pattern recognition often generates more reliable signals than absolute oscillator levels. Trend strength can also be measured using the CMO, where the oscillator’s value denotes the strength or weakness of the expected trend. 

How To Use Chande Momentum Oscillator

Bullish Scenario:- Just like any other momentum oscillator Chande MO also moves along the price of the commodity. So if the price moves up, the value of Chande MO will be above 0(zero) and will remain above it as long as the price increases, thus indicating a bullish trend.

Bearish Scenario:- Similarly, if the indicator’s value goes below 0 and stays there, it indicates a downtrend, thus making it a bearish scenario.

Building Chande Momentum Oscillator Trading Strategy On Mudrex

Strategy:- To be on the safe side and not generate any false signals, we will have a certain margin and not take the signals generated at 0 in this strategy.

BUY:- Chande MO crosses up 10 with a time period of 14 days

SELL:- Chande MO crosses down -10 with a time period of 14 days

TIME FRAME:- 3Hrs

Creating on Mudrex:- 

We will use 2 Chande MO indicator blocks. One for selling and One for buying.

For buying, we will use the following settings:-

For selling we will use the following settings:-

Final Strategy:-

Testing:- 

Running on Binance Futures: BTC/USDT with tick interval of 3H yielded an overall profit of 232.76 %

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