Window Oscillators and Overlay Indicators
numerically based Oscillator pattern analysis
Just as for geometrically based overlays, buy and sell signals may also be derived
from applying numerically based overlay indicators to window oscillators. Over-
lays that are usually employed include:■ (^) Bollinger Bands
■ (^) Moving Averages
■ (^) Moving Average Bands
■ (^) Fibonacci Levels
■ (^) Linear Regression Bands
Signals are indicated as follows:
■ (^) Oscillator breaching a numerically based overlay to the upside is a buy (bull-
ish) signal
■ (^) Oscillator testing a numerically based overlay from below is a sell (bearish)
signal
■ (^) Oscillator breaching a numerically based overlay to the downside is a sell
(bearish) signal
■ (^) Oscillator testing a numerically based overlay from above is a buy (bullish)
signal
See Figure 8.13. We observe that the RSI is finding support at the lower Bol-
linger band. Prices also bottomed every time the RSI found support at the lower
band. Notice that the actual oversold was a fair distance below the Bollinger band
oversold levels. This method effectively catches bottoms in a rapidly rising mar-
ket, without requiring the RSI to decline all the way down to test the 30 percent
oversold line.
fIgure 8.12 Oscillator Chart Pattern‐Based Buy and Sell Signals on the 30‐Min Chart
of Nikkei 225.
Source: MetaTrader 4