Simple Harmonic Oscillator Signals and Thresholds

Summary

The document describes the Simple Harmonic Oscillator (SHO), a time cycle oscillator presented in an IFTA Journal article. It uses price changes and their acceleration to form a signed measure, then smooths and normalizes that measure over a configurable period. The stated interpretation is bullish when the oscillator crosses above zero and bearish when it crosses below zero. It also identifies positive and negative thresholds for overbought, oversold, and more extreme readings.

The document notes that divergences may also be considered, but it gives no trading rules for acting on them, performance results, or comparisons with other indicators. The supplied implementation fixes the period at 14 despite including a range check for the setting, so users should verify how parameters are handled in their platform. Thresholds and signals are presented as indicator conventions; no evidence establishes their predictive value or suitability across instruments and market conditions.

Key ideas

• The oscillator derives a signed value from price movement and changes in movement.
• Bullish and bearish signals are defined by crossings above and below zero.
• The document gives separate levels for overbought, oversold, and extreme readings.
• Divergence is mentioned as a possible consideration, without a defined entry or exit method.
• The document provides no evidence of profitability or robustness across markets.

Tags

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