McClellan Oscillator Analysis & McClellan Oscillator Signals

Developed by McClellan.

The McClellan Oscillator is an indicator that is based on smoothing the difference between the number of bullish candlesticks and bearish candles. This indicator looks similar to the traditional MACD.

McClellan Oscillator

Gold Analysis and Generating Signals

This Oscillator is a momentum indicator that can be traded in the same way as the MACD indicator. There are Three techniques that McClellan Oscillator can be used to generate signals.

Zero Center Line Crossover Signals:

Bullish Signals- When the oscillator crosses above the zero center-line a buy signal is given.

Bearish Signals- When the oscillator crosses below the zero center-line a sell signal is given.

Analysis in Gold Trading

Divergence Signals:

Looking for divergences between the McClellan Oscillator and price can prove to be very effective in spotting the potential reversal &/or trend continuation points in price movement.

There are several types of divergences:

Classic Divergence ( Regular Divergence )

• Bullish Divergence: Lower lows in price action and higher lows in the McClellan Oscillator.

• Bearish Divergence: Higher highs in price and lower highs in the McClellan Oscillator.

Hidden Divergence Setup

• Bullish Divergence: Higher lows in price action and lower lows in McClellan Oscillator.

• Bearish Divergence: Lower highs in price action & higher highs in McClellan Oscillator.

Oversold/Overbought Levels on Indicator

The McClellan Oscillator is also used to identify potential overbought and oversold levels in price action movements. The overbought and oversold conditions are generated when the oscillator moves to extreme levels on one side and starts to turn, however, in a strong trending market the oscillator will stay in the overbought and oversold levels for a long time. It is not recommended to trade overbought and oversold levels to generate signals. The best signal to use is the Centerline cross-over signals to generate signals.