McClellan Oscillator Stock Indices Analysis and McClellan Oscillator Stock Indices Signals

Developed by McClellan.

The McClellan Oscillator is an indicator that's based on smoothing the difference between the number of bullish candlesticks & bearish candles. This indicator looks similar to the traditional MACD.

McClellan Oscillator

Indices Analysis and Generating Stock Indices Signals

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

Zero Center Line Crossover Signals:

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

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

Analysis in Indices Trading

Divergence Signals:

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

There are several types of divergences:

Classic Stock Indices Trading Divergence (Regular Indices Trading Divergence )

• Bullish Divergence: Lower lows in price action & higher lows in the McClellan Oscillator.

• Bearish Divergence: Higher highs in price & lower highs in the McClellan Oscillator.

Hidden Indices Trading Divergence Setup

• Bullish Divergence: Higher lows in price action & lower lows in McClellan Oscillator.

• Bearish Divergence: Lower highs in price action & higher highs in McClellan Oscillator.

Overbought/Oversold Levels on Indicator

The McClellan Oscillator is also used to identify potential overbought and oversold levels in 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 signals. The best signal to use is the Centerline cross over signals to generate trading signals.