Ultimate Oscillator: Weighted Momentum Across Three Periods

Summary

The Ultimate Oscillator combines buying pressure relative to true range across three lookback periods. Each period’s ratio is calculated by summing buying pressure and true range over that window, then dividing the two sums. The shortest period receives the greatest weight, the middle period receives half as much, and the longest receives the least; the weighted average is scaled to a 0–100 range.

The indicator has inputs for the three periods and for overbought and oversold levels. Buying pressure compares the close with the lower of the current low and previous close; true range spans the higher of the current high and previous close to the lower of those same values. The description explains the calculation but gives no trading rules, parameter values, performance evidence, or guidance for selecting thresholds. Its use as a signal therefore requires separate testing and interpretation.

Key ideas

• The oscillator blends momentum measurements calculated over three different lookback periods.
• The shortest period contributes the most weight, followed by the middle and longest periods.
• Each period’s measure is summed buying pressure divided by summed true range.
• Overbought and oversold levels are configurable inputs, but the document does not specify their values.

Tags

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