Coppock Curve Technical Analysis and Coppock Curve MT5 Indicator

Created by Edwin Sedgwick Coppock

This MT5 technical indicator was used for technical analysis of Stocks & Commodities in the beginning but was later used to trade Forex.

The principle behind this is the psychology of trading, based on the theory that human habit is predictable. And forex price movement always oscillates in a zigzag manner.

The principle of adaptation-level applies to how forex price reacts at certain levels, stock and currency prices will react in the same way or pattern as those observed historically.

FX Technical Analysis & Generating Signals

In Forex trading, The moving average is the simplest form of an adaptation-level, the forex price will oscillate around the moving average. This forms the basis of this MT5 indicator, which is a longer term oscillator MT5 indicator MT5 indicator based on this adaptation-levels(moving average), but in a different way.

Oscillators usually begin by calculating a % change of the current forex price from some previous forex price point, where the previous forex price point is the reference point (adaptation-level).

Edwin Coppock reasoned that the market participants' emotional state could be quantified by summing up the % changes over the recent past to get a general sense of the market's longer term momentum.

For example, If we compare prices relative to a year ago and we see that this month the market is up 20% compared to a year ago, last month it was up 15% over a year ago, and 10 %, 7.5% & 5% respectively the months before that, then we may determine that the market is gaining momentum.

Basic signals can also be generated using the Coppock Curve to trade market reversals from extreme forex price levels. Looking for divergence and forex trend line breaks may also be combined to confirm the signal.

Implementation

The input levels of this MT5 indicator may need to be adjusted to better fit the dynamic nature of the forex currency markets trading.

Coppock Curve has a zero line reference point, but this doesn't represent the adaptation-level but it is only a visual reference point only.