The rainbow oscillator (OSC) is similar to the Rainbow moving average indicator. the calculation of this indicator is the same as the rainbow moving average indicator.
The Rainbow OSC will show you the highest high and the lowest low of the rainbow moving average indicator all the SMA lines.
This Oscillator is the same as the Rainbow MA indicator, the only difference is the way of displaying the trend or other word the visualization difference only. the work and indication are the same.
Rainbow Oscillator Setting
- Period: The period will take to calculate this indicator, the 2 period is the default period of this indicator, if you have confused about this period please read the rainbow Moving average indicator setting. your confusion will be clear after reading.
- Field: the field price will take for calculation of this indicator, which means the default field is set as a close, this means the period closing price will take to calculate this oscillator.
- HHV/LLV Lookback: highest high value/ lowest low-value look-back is 10.
- Positive Bar: when the share price rising which is positive, the oscillator will form a positive bar, by default positive bar color, is green. you can change the color from here.
- Negative Bar: the negative bar color setting, when the stock price is falling then this negative bar will form.
- the panel, show underlay line, Y-axis, invest Y axis, below all these options are the setting of the adjusting this oscillator, all these options I already discuss in the other indicator setting, which is almost the same. you can read other indicators for more information about these options.
The rainbow moving average indicator is calculation is the last 2-period simple moving average is the 1 line of the Rainbow moving average indicator, then the other 9 moving average is the simple moving average of the previous SMA lines simple moving average. The rainbow OSC also calculated in the same way.
Rainbow Oscillator Trading Strategy
- the width of this oscillator will tell you, what trend of the share price.
- increasing the wideness of this oscillator width, this indicates the current trend may continue.
- if the width of this oscillator is flatter, this indicates the trend may be a flat or sideways market or stable market.
- If this oscillator width is above the 80 level, above the 80 level of this oscillator indicate instability in the stock price. in this situation, a possibility of the share price reversal may soon.
- if the oscillator is falling below the 20 this indicates the share price reversal may soon.
The rainbow oscillator is a similar indicator like the rainbow MA indicator. the difference is only displaying the value.
*Read Related Post For More Information.