High accuracy OsMA system – The Oscillator of Moving Average (OsMA), also known as the moving average oscillator indicator, is a tool that attempts to identify whether a market is overbought or oversold.
Moving Average of Oscillator (OsMA) is a technical analysis tool that reflects the difference between an oscillator (MACD) and its moving average (signal line).
MACD (or Moving Average Convergence/Divergence) is itself an oscillator.
The main MACD line is the difference between a 12-period exponential moving average (EMA) and a 26-period EMA. The indicator also plots a signal line, which is a 9-period moving average of the MACD value.
OsMA is the difference between these two key values of the MACD indicator.
To be more exact, it is calculated as the difference between the MACD and the signal line value:
OsMA = MACD – signal
It’s worth pointing out that you don’t always have to use MACD — you can, in fact, use an oscillator, applying a basic principle of calculating OsMA as the difference between an oscillator and its smoothed average.
The OsMA is displayed as a histogram – up or down from the zero line.
The values of OsMa are positive, if MACD is above the signal line, and negative if MACD is below the signal line.
- OsMA switching from falling to rising in extreme areas may be a sign of BULLISH reversal;
- OsMA switching from rising to falling may be a sign of BEARISH reversal.
- OsMA rising above zero (corresponds to MACD crossing from below its signal line) generates a BUY signal;
- OsMA falling below zero (corresponds to MACD crossing from above its signal line) generates a SELL signal.
What are the disadvantages of the OsMA indicator…?
The OsMA indicator is not the reliable indicator to use when the market is very volatile and choppy because it will give fake signals.
In this system, we use trend filter indicators to reduce the fake signals.
- Best Time Frames: H1, H4, and Daily
- Most Recommended Currency Pairs: EURUSD, GBPUSD, and all Major Pairs
- Momentum MAs
- Bulls Bears
- BBand Stop Alert
- OsMA indicator is rising and above 0 level
- Momentum MAs blue color lines
- Bulls Bears blue color
- BBand Stop Alert blue color
- SEFC05 blue color
- OsMA indicator is falling and below 0 level
- Momentum MAs red color lines
- Bulls Bears magenta color
- BBand Stop Alert red color
- SEFC05 red color
To say the truth, success when using the OsMA indicator is relative; in other words, it’s as good as the trader who interprets its signals.
It gives very reliable signals when interpreted correctly but sucks when misinterpreted or the trader does not use other methods to complement its signals.
The key is to master its correct use and to take only reliable signals.