Chande Momentum Oscillator

The Chande Momentum Oscillator is an indicator invented by the technical analyst Tushar Chande. It is similar to other momentum indicators such as the Relative Strength Index because it is range bounded (+100 and -100).

Chande Momentum Oscillator

The Chande Momentum Oscillator is an indicator invented by the technical analyst Tushar Chande. It is created by calculating the difference between the sum of all recent gains and the sum of all recent losses and then dividing the result by the sum of all price movement over the period. The Chande Momentum Oscillator is similar to other momentum indicators such as the Relative Strength Index and the Stochastic Oscillator because it is range bounded (+100 and -100).


Chande Momentum Oscillator Formula

The Chande Momentum Oscillator is constructed using the sum over a given period of price changes on up days, sum-up(high-low), and the sum over the same period of prices on down days, sum-down(high-low).

The specific formula is:

Chande Momentum Oscillator formula

An exponential moving average of this line is then overlaid upon the oscillator as a signal line.

Chande Momentum Oscillator Interpretation

There are two different ways that the Chande Momentum Oscillator is used as a trading signal. The first is to measure overbought (greater than 50%) or oversold (less than -50%) levels for a given stock.

Price chart illustrating use of Chande Momentum Oscillator

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