McClellan Oscillator Indices Technical Analysis and McClellan Oscillator Indices Trading Signals

Developed by McClellan.

The McClellan Oscillator is an indicator that is based on smoothing the difference between the number of bullish candlesticks and bearish candlesticks. This stock indices indicator looks similar to the traditional MACD.

McClellan Oscillator

Indices Technical Analysis and Generating Indices Trading Signals

This Oscillator is a momentum indicator that can be traded in the same way as the MACD indicator. There are 3 techniques that McClellan Oscillator can be used to generate stock indices signals.

Zero Center Line Crossover Signals:

Bullish Signals- When the oscillator crosses above zero center-line a buy stock indices signal is given.

Bearish Signals- When the oscillator crosses below zero center-line a sell stock indices signal is given.

Technical Analysis

Divergence Indices Trading Signals:

Looking for divergences between the McClellan Oscillator and stock indices price can prove to be very effective in identifying potential reversal and/or indices trend continuation points in stock indices price movement.

There are several types of divergences:

Classic Divergence (Regular Divergence)

• Bullish Divergence: Lower lows in stock indices price action and higher lows in the McClellan Oscillator.

• Bearish Divergence: Higher highs in stock indices price and lower highs in the McClellan Oscillator.

Hidden Divergence

• Bullish Divergence: Higher lows in stock indices price action and lower lows in McClellan Oscillator.

• Bearish Divergence: Lower highs in stock indices price action and higher highs in McClellan Oscillator.

Overbought/Oversold Levels

The McClellan Oscillator is also used to identify potential overbought and oversold levels in stock indices price action movements. The overbought and oversold conditions are generated when the oscillator moves to extreme levels on one side and starts to turn, however, in a strong trending market the oscillator will stay in the overbought and oversold levels for a long time. It is not recommended to trade overbought and oversold levels to generate stock indices trading signals. The best signal to use is the Center-line crossover signals to generate stock indices signals.