PERCENTAGE PRICE OSCILLATOR (PPO)
Percentage Price Oscillators (PPO) is derive
by subtracting Longer moving average from the smaller moving average
and then dividing by longer moving average.
The Percentage Price Oscillators (PPO) is
almost identical to the MACD.
Description :
The Percentage Price Oscillators (PPO) is
represents two moving averages relative to each others. It’s
generates buy signals when shorter term moving average cross above
longer term moving average.
The Percentage Price Oscillators (PPO) Histogram shows the difference between
the Percentage Price Oscillators (PPO) and 9-days EMA (exponential moving average) of the PPO.
Increases in the Percentage Price Oscillators (PPO) histogram represents the bullish momentum is
strengthening and declines in Percentage Price Oscillators (PPO) Histogram represents bearish
momentum is strengthening. All crossover above or below the center
line indicates shorter moving average crossing above or below the
longer moving average and that’s a buy or sell signal..
How to Calculate?
{[ ( Shorter Moving Avg ) – ( Longer Moving
Avg ) ]/ (Shorter Moving Avg)}*100
Divergence in the Percentage Price Oscillators (PPO): A lower peak in the Percentage Price Oscillators (PPO) against higher highs in the stock market
called negative divergence and typically it's a
Sell signal.
A higher peak in the Percentage Price Oscillators (PPO) against lower lows in the stock market
called positive divergence and typically it's a
Buy signal.
To get good result with Percentage Price Oscillators (PPO) we need to use it with
other technical indicators like
Moving Average (MA)
|
On Balance Volume (OBV)
|
Price Rate Of Change (ROC)
|
Relative Strength Index (RSI)
|
Stochastic Oscillator (STO)
|
Commodity Channel Index (CCI)
|
Chaikin Money Flow oscillator (CMF).
When we use two or three technical indicators and in case of positive divergence and negative divergence it giving real good result, only you need to change time span and find out which is a better pair for you.