McClellan Oscillator Analysis and McClellan Oscillator Technical Signals
Developed & Created by McClellan.
The McClellan Oscillator is an indicator that's based on smoothing the difference between the number of bullish candlesticks & bearish candles. This indicator looks similar to the traditional MACD technical indicator.
McClellan Oscillator Indicator
FX Analysis and How to Generate Trading Signals
This Oscillator is a momentum indicator which can be traded and transacted in the same way as the MACD. There are 3 techniques/methods that McClellan Oscillator indicator can be used to generate trade signals.
Zero Center Line Cross-over Signals:
Bullish Signals- When oscillator trading crosses above zero center-line a buy trade signal is generated.
Bearish Signals- When oscillator crosses below the zero center-line a sell trade signal is generated.
Analysis in FX Trading
Divergence Trading Setup Signals:
Looking for divergences between the McClellan Oscillator & price can prove to be very effective in spotting the potential reversal and/or trend continuation points in price movement.
There are several types of divergence-setups:
Classic Divergence (Regular Forex Divergence)
- Bullish Divergence: Lower lows in price action & higher lows on the McClellan Oscillator.
- Bearish Divergence: Higher highs in price & lower highs on the McClellan Oscillator Indicator.
Hidden Forex Divergence
- Bullish Divergence: Higher lows in price action and lower lows on the McClellan Oscillator.
- Bearish Divergence: Lower highs in price action & higher highs on the McClellan Oscillator Indicator.
Over-bought/Oversold Levels in Trading Indicator
The McClellan Oscillator is also used to identify the potential overbought & oversold levels in price action movements. The overbought and oversold conditions are derived & 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 & oversold levels for a long time. It isn't recommended to trade overbought & oversold levels to generate trade signals. Best signal to use is the Center-Line crossover signals to generate trade signals.
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