Ultimate Oscillator
Momentum oscillator that averages buying pressure across 7-, 14-, and 28-period timeframes to reduce false signals from a single period.
Formula
Buying Pressure = Close − min(Low, Prev Close); True Range = max(High, Prev Close) − min(Low, Prev Close); Average_n = Σ(BP, n) / Σ(TR, n); UO = 100 × (4 × Avg7 + 2 × Avg14 + Avg28) / 7
The Ultimate Oscillator, developed by Larry Williams, tackles a core weakness of single-period oscillators by weighting the buying pressure calculation across three different timeframes. Shorter periods get heavier weights (4 for 7-period, 2 for 14-period, 1 for 28-period).
The bounded result (0–100) is interpreted similarly to RSI: above 70 is overbought, below 30 is oversold. However, Williams stressed using it primarily for divergence signals: a bullish divergence (price lower low, UO higher low) combined with the oscillator subsequently breaking above the divergence high triggers the buy. This confirmation step significantly reduces false positives.
Related Terms
Commodity Channel Index (CCI)
Oscillator measuring how far price deviates from its statistical mean; above +100 is strong momentum, below −100 suggests oversold.
IntermediateRelative Strength Index (RSI)
Momentum oscillator (0–100) that flags overbought conditions above 70 and oversold below 30 over a default 14-period lookback.
BeginnerStochastic Oscillator
Momentum oscillator comparing a closing price to its high-low range over 14 periods; values above 80 are overbought, below 20 oversold.
BeginnerWilliams %R
Inverted Stochastic oscillator (0 to −100) identifying overbought (above −20) and oversold (below −80) conditions over a 14-period window.
Beginner