An ATR- and Volume-Adjusted Momentum Oscillator

Summary

This indicator normalizes price momentum by average true range, smooths the result with exponential averages, and compares it with a smoothed absolute-momentum measure. A weighted moving average produces the oscillator histogram, with a separate signal line. The document describes interpreting crossovers between the histogram and signal line as bullish or bearish cues, and the zero line as a dividing point between positive and negative momentum. It recommends applying the measure to instruments with volume data.

The page includes translated MetaStock-derived code and example settings, but presents no backtest, market examples, or evidence that the signals are profitable. The formula labeled as volume-adjusted absolute momentum adds absolute momentum to the absolute change in volume, so readers should inspect the calculation rather than assume it is a conventional volume-weighted measure. Crossovers and zero-line moves can lag or produce false signals, and the indicator’s behavior may vary by instrument and parameter choice.

Key ideas

• The oscillator scales price momentum by average true range and applies smoothing.
• Its histogram is compared with a signal line, with crossovers offered as directional cues.
• A zero-line crossing is described as a shift between positive and negative momentum.
• The calculation includes a volume-change term, but the document provides no validation of its effectiveness.
• The indicator is intended for instruments with volume data and may generate lagging or false signals.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.