Coppock Curve Stocks Technical Analysis and Coppock Curve Stocks Signals

Developed by Edwin Sedgwick Coppock

This stocks technical indicator was used for technical analysis of Stocks & Commodities in the beginning but was later used to trade Stocks.

The principle behind this is the psychology of trading, based on the theory that human habit is predictable. And stocks price movement always oscillates in a zigzag manner.

The principle of adaptation-level applies to how stocks price reacts at certain levels, stock and stocks prices will react in the same way or pattern as those observed historically.

Stock Technical Analysis & How to Generate Signals

In stock trading, The moving average is the simplest form of an adaptation-level, the stocks price will oscillate around the moving average. This forms the basis of this indicator, which is a longer term oscillator based on this adaptation-levels(moving average), but in a different way.

Oscillators usually begin by calculating a % change of the current stocks price from some previous stocks price point, where the previous stocks price point is the reference point (adaptation-level).

Edwin Coppock reasoned that the stocks market participants' emotional state could be quantified by summing up the % changes over the recent past to get a general sense of the stocks market's longer term momentum.

For example, If we compare stocks prices relative to a year ago and we see that this month the stocks market is up 20% compared to a year ago, last month it was up 15% over a year ago, and 10 %, 7.5% & 5% respectively the months before that, then we might determine that the stocks market is gaining momentum.

Basic signals can also be generated using the Coppock Curve to trade market reversals from extreme stocks price levels. Looking for divergence and stocks trend line breaks may also be combined to confirm the signal.

Implementation

The input levels of this indicator might need to be adjusted to better fit the dynamic nature of the stocks markets trading.

Coppock Curve has a zero line reference point, but this does not represent the adaptation-level but it's only a visual reference point only.