Chande Momentum Oscillator (CMO)
factor.formula
Positive Price Change (PC) =
When the current price rises, record the difference between the current closing price and the previous closing price; otherwise, record 0. This value reflects the momentum of the price increase.
Negative Change (NC) =
When the current price falls, record the absolute value of the difference between the current closing price and the previous closing price; otherwise, record 0. This value reflects the momentum of the price decline.
Sum of Positive Changes (SPC) =
Calculates the sum of the most recent N periods of positive price changes, reflecting the cumulative momentum of price increases over a period of time.
Sum of Negative Changes (SNC) =
Calculates the sum of the most recent N periods of negative price changes, reflecting the cumulative momentum of price declines over a period of time.
Chande Momentum Oscillator (CMO) =
Calculate the difference between the sum of positive price changes and the sum of negative price changes, divide by their sum, and multiply by 100. This value is normalized to a range of -100 to +100 and represents the relative strength of price momentum.
default value:
The default calculation period is 20, which can be adjusted according to different markets and trading strategies.
Explanation of the parameters in the formula:
- :
Closing price at time t
- :
The closing price at time t-1, that is, the closing price of the previous period
- :
Positive price change at time t
- :
Negative price change at time t
- :
The sum of N periods of positive price changes at time t
- :
The sum of negative price changes over N periods at time t
- :
Calculate the CMO period, usually 20.
factor.explanation
The Chande Momentum Oscillator (CMO) measures the relative strength of price increases and decreases over a period of time to determine the strength of market momentum. The CMO value fluctuates between -100 and +100. When the CMO value is close to +100, it indicates that the market is overbought and prices may face correction pressure; when the CMO value is close to -100, it indicates that the market is oversold and prices may have a chance to rebound. Generally, CMO > 50 is considered to be strong market momentum, while CMO < -50 is considered to be weak market momentum. In addition, CMO can also assist in identifying divergence signals, that is, when prices hit new highs/new lows but CMO does not hit new highs/new lows, it may indicate a potential reversal signal. The CMO indicator is suitable for volatile markets and finding short-term trading opportunities. It can be used in conjunction with other technical indicators to improve the reliability of the signal.