Pivot Mean Oscillator: Normalizing Price Against a Cumulative Average

Summary

The article defines the Pivot Mean (PM) as price divided by its cumulative moving average (CMA), making it a normalized measure of price’s distance from a running average. The Pivot Mean Oscillator (PMO) is the difference between moving averages of PM signals, using close and open prices in the described version. It explains an implementation for MetaTrader and proposes reading reversals around peaks and troughs as early warnings, with crossings of the zero line as trend confirmation. Shorter averaging lengths respond faster but can produce less smoothing.

EURUSD examples show PMO resembling RSI, including a pattern the author interprets as a possible short setup, and the article reports a near-linear relationship with a version computed from unnormalized price signals. It also describes the PMO value distribution as roughly bell-shaped. These observations are exploratory, not evidence of a tested profitable strategy: the indicator is unbounded, can give false signals, and its proposed rules lack a systematic out-of-sample or cost-aware evaluation. The article leaves alternative averaging methods and strategy testing for future work.

Key ideas

• PM expresses current price relative to its cumulative moving average.
• PMO subtracts moving averages of normalized signals derived from close and open prices.
• The proposed readings include reversals near extremes and crossings of the zero line.
• Shorter averaging windows reduce delay while also reducing smoothing.
• The EURUSD examples are exploratory and do not establish strategy profitability.

Tags

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