How to finding buy and sell points with the Price Oscillator, an indicator that works with moving averages?

The formula used to calculate the Price Oscillator is: short-term MA minus long-term MA.

💥The Price Oscillator is a type of indicator that helps to determine whether the price has crossed the moving average. This tool can be found in the indicator section, but it is mentioned in this section because it is related to identifying potential buy and sell points.

💥Sometimes, the price and the moving average line are very close to each other, making it difficult to determine whether the price has crossed the moving average or vice versa. This can be confusing, but using the Price Oscillator can help to clarify the situation.

💥To use the Price Oscillator, you need to know its formula and shape. As shown in the example above, the Price Oscillator is typically displayed as a histogram, with bars above the zero line indicating a bullish trend and bars below the zero line indicating a bearish trend.

💥In the lower frame, we can see the price oscillator which is created by taking the difference between two moving averages with different periods. The two periods used in this case are 10 and 25 days to match the lower frame's comparison of the stock price movement with a 20 and 5 day simple moving average. The program needs to be instructed to calculate these moving averages in a simple way to complete the image creation. The resulting oscillator has a squiggly line representing the 5 day moving average (SMA) and a zero line representing the 20 day SMA. However, the zero line is not a 20 day SMA in this case, but rather a straightened version of the 20 day SMA, placed at the center to let the 5 day SMA wobble instead. The distance between the 5 day SMA and the zero line is still equal to the distance between the 5 day SMA and the 20 day SMA in the upper frame.

💥Therefore, the buy and sell points will be the same on both the lower and upper frames. However, determining whether they intersect or not is easier because the machine will calculate positive, zero, or negative values clearly. We can retrieve this information because if the value is positive, it means that the 5-day SMA line crosses above the 20-day SMA line. If it is negative, it means that the 5-day SMA line crosses below the 20-day SMA line. The distance between the 5-day SMA line and the zero line can indicate support and resistance levels. For example, around the first ellipsis line, it represents a resistance level. It is also important to note any actual stock declines in the top frame.



👉First, calculate the short-term and long-term moving averages of the price. The short-term moving average is usually calculated over a period of 12 days, while the long-term moving average is calculated over a period of 26 days.

👉Calculate the difference between the short-term and long-term moving averages. This is called the Price Oscillator.

👉Plot the Price Oscillator on a chart. The Price Oscillator is usually displayed as a histogram, with bars above the zero line indicating a bullish trend and bars below the zero line indicating a bearish trend.

👉Look for crossovers of the Price Oscillator with the zero line. When the Price Oscillator crosses above the zero line, it is a bullish signal indicating a potential buy point. When the Price Oscillator crosses below the zero line, it is a bearish signal indicating a potential sell point.

👉Look for divergence between the price and the Price Oscillator. If the price is making higher highs but the Price Oscillator is making lower highs, it is a bearish divergence and could signal a potential sell point. If the price is making lower lows but the Price Oscillator is making higher lows, it is a bullish divergence and could signal a potential buy point.

👉Use other technical indicators and fundamental analysis to confirm your buy and sell signals before making any trades.

💥💥Remember that no indicator is 100% accurate and it's important to use multiple indicators and analysis to make informed trading decisions.