McClellan Oscillator Analysis and McClellan Oscillator Technical 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 trading indicator looks similar to the traditional MACD.
McClellan Oscillator Trading Indicator
Forex Analysis and How to Generate Signals
This Oscillator is a momentum indicator that can be traded in the same way as the MACD. There are 3 techniques that McClellan Oscillator Technical can be used to generate trade signals.
Zero Center-Line Cross over Signals:
Bullish Signals- When the oscillator trading crosses above the zero center line a buy trade signal is given.
Bearish Signals- When the oscillator trading crosses below the zero center line a sell trade signal is given.
Analysis in Forex Trading
Divergence Setup 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 Trading Indicator.
- Bearish Divergence: Higher highs in price & lower highs in the McClellan Oscillator Trading Indicator.
Hidden Forex Divergence
- Bullish Divergence: Higher lows in price action & lower lows in McClellan Oscillator Trading Indicator.
- Bearish Divergence: Lower highs in price action and higher highs in McClellan Oscillator Trading Indicator.
Over-bought/Oversold Levels on Trading Indicator
The McClellan Oscillator is also used to identify potential overbought and over-sold levels in price action movements. The overbought & oversold conditions are generated when the oscillator technical indicator moves to extreme levels on one side & starts to turn, however, in a strong trending market the oscillator will stay in the overbought and over-sold levels for a long time. It is not recommended to trade overbought and over-sold levels to generate trade signals. Best signal to use is the Center-Line cross-over signals to generate trade signals.
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