McClellan Oscillator Analysis and McClellan Oscillator Signals
Developed by McClellan.
The McClellan Oscillator is an indicator that is based on smoothing the difference between the number of bullish candles and bearish candlesticks. This indicator looks similar to the traditional MACD.
McClellan Oscillator
FX Analysis & How to Generate Signals
This Oscillator is a momentum indicator that can be traded in the same way as the MACD. 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 zero center-line a buy signal is given.
Bearish Signals- When the oscillator crosses below zero center-line a sell signal is given.
Analysis in Forex 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 FX 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 FX Divergence
- Bullish Divergence: Higher lows in price action and lower lows in McClellan Oscillator.
- Bearish Divergence: Lower highs in price action and higher highs in McClellan Oscillator.
Overbought/Oversold Levels on Indicator
The McClellan Oscillator is also used to identify potential overbought & oversold levels in price action movements. The overbought & oversold conditions are generated when the oscillator moves to extreme levels on one side & starts to turn, however, in a strong trending market the oscillator will stay in the overbought & oversold levels for a long time. It is not recommended to trade overbought & oversold levels to generate signals. Best signal to use is the Centerline cross over signals to generate signals.
