Technical Analysis

Ultimate Oscillator

What is the Ultimate Oscillator?

The Ultimate Oscillator is a technical indicator developed by Larry Williams in 1976 to measure the price momentum of an asset over multiple time frames. By using a weighted average of three different timeframes, the indicator has less volatility and trading signals than other oscillators that rely on a single timeframe. Divergence generates buy and sell signals. Due to its multi-time frame structure, the final oscillator produces less divergent signal than other oscillators.

Transaction view.

key takeaways

  • The indicator uses three time frames in its calculations: 7, 14 and 28 periods.
  • Shorter timeframes have the most weight in the calculation, while longer timeframes have the least weight.
  • A buy signal occurs when a bullish divergence occurs, with the divergence low below 30 on the indicator, and then the oscillator rises above the divergence high.
  • A sell signal occurs when a bearish divergence occurs, the divergence high is above 70, and then the oscillator breaks below the divergence low.

The formula for the ultimate oscillator is:

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