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
- 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