What is Chande Momentum Oscillator (Strategy)

Tushar chande develops the Chande Momentum Oscillator (CMO). CMO indicator is the difference between the sum of all recent higher candle closing price and the sum of all recent lower candle closing then dividing the result by sum of all price movement over the same time period.

In a simple word, Chande momentum Oscillator tells you, Overbought and oversold zone.

Chande Momentum Oscillator Setting

Go to indicator section and search for “Chande Momentum Oscillator”

chande momentum oscillator settings

Setting

  • Period: by default, it’s 9 Period. Period means each candle or bar of share price movement. So here, indicator calculates with 9-period price activities.
  • Result: this is an indicator line color.
  • Show zones: if the indicator line goes into Overbought or Oversold zone, then a shadow will cover Overbought and oversold zone.
  • Overbought: This is an overbought zone limit and color setting.
  • Oversold: This is an oversold zone limit and color setting.

Chande Momentum Oscillator trading strategy

CMO Indicator move between +100 & -100.

  • If share price trading below -50 level. This is the Oversold zone and price can bounce back.
  • If share price Trading above + level. This is the Overbought zone and price may not sustainable & price can fall.
  • CMO indicator is generally work in Range bound stocks. In a trending market, it’s not much useful.
  • If share price raising and indicator moving to the downside. This is called bearish divergence & share price can fall soon.
  • If share price falling and CMO indicator moving to upward direction. This is called bullish Divergence and share price can rise soon.
  • if CMO indicator crossing ‘0’ line and going upward direction, after bottom out. this is the buying position.
  • If CMO indicator Crossing ‘0’ line and going to downward direction after reaching out peak point, this is the short-selling signal.
  • Sometimes share price can give breakout in the overbought zone, & share price can rise more.
  • Similarly, sometimes share price can falling more after reaching the Oversold zone.
  • CMO is Like RSI indicator But CMO indicator Moment is so fast with Price Movement. anything changes in price, that will show in the CMO indicator line.

Conclusion

Chande MTM indicator is a technical indicator that helps to find oversold and Overbought zone. So that we can find buying and selling positions, also support, and Resistance zone.

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