UO Overview
The Ultimate Oscillator (UO) combines momentum across three different timeframes (typically 7, 14, 28 periods) into a single bounded 0-100 oscillator. By averaging buying pressure over short, medium, and long periods with different weights, UO reduces false signals that plague single-period oscillators.
UO’s multi-timeframe approach means signals are more reliable because they require momentum agreement across multiple lookback windows.
How Ultimate Oscillator Works
Section titled “How Ultimate Oscillator Works”Core Concept
Section titled “Core Concept”- Calculate Buying Pressure: Close - True Low for each bar
- Average over 3 periods: Short (7), Medium (14), Long (28)
- Weight and combine: Short×4 + Medium×2 + Long×1, then normalize to 0-100
- Interpret: > 70 overbought, < 30 oversold
Key Characteristics:
- Multi-Timeframe = Combines 3 different period measurements
- Bounded 0-100 = Standard overbought/oversold levels
- Reduced False Signals = Multi-period averaging filters noise
- Weighted Combination = Short-term momentum weighted most heavily
Visual Interpretation
Section titled “Visual Interpretation”UO Behavior:
- Values above 70 indicate multi-timeframe overbought
- Values below 30 indicate multi-timeframe oversold
- Mid-range values (40-60) indicate balanced momentum
- Signal line crossovers provide timing signals
Trading Signals Available on Reversion
Section titled “Trading Signals Available on Reversion”These are the signal names you select when configuring UO in the algorithm builder or via the MCP agent:
| Signal | Triggers When | Typical Use |
|---|---|---|
uo_above_threshold | UO rises above threshold (e.g., 70) | Multi-period overbought |
uo_below_threshold | UO falls below threshold (e.g., 30) | Multi-period oversold |
uo_above_signalLine | UO crosses above signal line | Momentum accelerating |
uo_below_signalLine | UO crosses below signal line | Momentum decelerating |
Display: Separate pane
Category: Momentum
Threshold range: 0 – 100
Key Characteristics
Section titled “Key Characteristics”What Ultimate Oscillator Does Well:
- Reduced False Signals: Multi-timeframe consensus filters noise
- Robust Overbought/Oversold: Extremes are more reliable than single-period oscillators
What to Watch Out For:
- Slower to React: Multi-period averaging introduces lag
- Fixed Period Ratios: Less flexibility than independent period settings
When to Use Ultimate Oscillator:
- High-Conviction Reversals: UO extremes are reliable because they require multi-TF agreement
- Momentum Filter: Use as confirmation for other indicator signals
When NOT to Use Ultimate Oscillator:
- Fast Scalping: Too laggy for quick trades
- Without Trend Context: Combine with ADX or MAs