The Chande Momentum Oscillator (CMO) is a momentum-based forex indicator that measures trend strength and identifies overbought and oversold conditions. In this guide, we’ll explore how CMO works, its advantages, and the best strategies to trade with it effectively.
The Chande Momentum Oscillator (CMO) is a technical momentum indicator developed by Tushar Chande to measure the strength of price movements. Unlike traditional oscillators like RSI or Stochastic, the CMO accounts for both upward and downward price changes, making it highly responsive to market momentum.
The CMO is calculated using the following formula:
CMO = [(Sum of Up Moves – Sum of Down Moves) / (Sum of Up Moves + Sum of Down Moves)] × 100
Where:
CMO helps traders identify market extremes and potential reversals:
Trading Tip: This strategy works best in ranging markets, where price oscillates between support and resistance.
Divergence between price and CMO can indicate trend reversals:
Pairing CMO with a moving average (e.g., 50 EMA) can refine trade signals:
✅ Pros:
❌ Cons:
The Chande Momentum Oscillator (CMO) is a powerful momentum indicator that helps traders gauge trend strength, spot reversals, and optimize trade entries. When combined with other indicators, CMO enhances trade accuracy and decision-making.
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