Chande Momentum Oscillator (CMO) Interpretation

Compares a 14-day RSI with a 14-day Chande momentum oscillator (CMO). The first thing to notice is that the Chande momentum oscillator (CMO) reaches an overbought and oversold extreme more times than the RSI.

Sometimes it is possible to construct more timely and better trendlines for the Chande momentum oscillator (CMO), though occasionally it works the other way. It does not always work in favor of the Chande momentum oscillator (CMO), but I prefer this indicator because of the more numerous overbought and over­sold readings, and the plus and minus scaling, which makes it easier to spot positive and negative readings.

One approach that helpful is to plot a 20-day Chande momentum oscillator (CMO) and smooth it with a 10-day MA, then take a smoothing of this indicator, in this case a 10-day simple MA, the dashed line that hugs the Chande momentum oscillator (CMO).

MA crossovers are then used to generate buy and sell alerts. However, since there are numerous crossovers, it is important to make an attempt at filtering out those that are not likely to work out by only using those that develop at an extreme level in view of the fact that they tend to be more accurate. This should then be confirmed by a trend break in the price itself.