Center Of Gravity Oscillator
Platform: MT4 Type: Oscillator Last update: August 17, 2024The Center Of Gravity Oscillator produces nearly zero lag readings of the market corrections and turning points (pivot points) with high accuracy.
That indicator is a result of years of studies of adaptive filters by John Ehler and was developed and presented in Stocks & Commodities magazine in 2002. The custom formula of that gauge is given a few lines below.
The Center of Gravity oscillator works in a similar manner to the stochastic oscillator, but the difference is it just has no overbought and oversold areas.
Center Of Gravity Oscillator Formula
CG = -1*NUM/DEN NUM = int (n, i = 0) DEN = int (n, i = 0) , where PRICE = the price i bar (bars) back; PRICE = the current bar price; PRICE = the price 2 bars back.
How to trade with this center of gravity oscillator?
The oscillator has two signal lines: red and blue. The main signal of the indicator happens on the event of crossover:
- when the blue line crosses above the red one, you should expect a bullish correction
- when the blue line crosses below the red one, you should expect a bearish correction
In addition, signal divergence can also be observed in the Center of Gravity oscillator and it works really well. If the price continues forming lower highs and/or lower lows while the Center of Gravity oscillator remains trending higher, a divergence signal is generated and we can expect an overall trend to shift to bullish.
Similarly, if the price continues forming higher highs and/or higher lows while the Center of Gravity oscillator remains to trend lower, we can expect an overall trend to turn bearish.
Example of a good entry: the price is making new HH or LL, or COG touches a trendline and the crossover occurs.
