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Moving Average of Oscillator OsMA

 

Moving Average of Oscillator Indicator Purpose


Moving Average of Oscillator or Oscillator of Moving Average (OsMA) is a technical analysis tool that reflects the difference between an oscillator (MACD) and its moving average (signal line) 7. In this case, Moving Average Convergence/Divergence base-line is used as the oscillator, and the signal line is used as the smoothing. If OsMA stops falling and starts rising, it is a BUY signal. If OsMA stops increasing and starts decreasing it is a SELL signal. The discrepancy of the price and OsMA is a trustworthy signal.



Moving Average of Oscillator Indicator Usage


Extremum points:

  • OsMA switching from falling to rising in extreme areas may be a sign of bullish reversal;
  • OsMA switching from rising to falling may be a sign of bearish reversal.

Crossing zero axes:

  • OsMA rising above zero (corresponds to MACD crossing from below its signal line) generates a buy signal;
  • OsMA falling below zero (corresponds to MACD crossing from above its signal line) generates a sell signal.




Moving Average of Oscillator Indicator Calculation


OSMA is calculated and estimated from the Moving Average Convergence/Divergence indicator (MACD) and its signal line. The signal line is a 9 period SMA of MACD.


SIGNAL = SMA( MACD, 9 )


OSMA = MACD – SIGNAL

 

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