Price oscillator is mainly used in day trading where traders use it as an indicator to decide when to enter the market or when is the perfect time to sell and take profit over your assets. But for a newbie, it would be difficult to understand read indicators or charts but no worries reading the article would help you to understand point by point.
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What is Oscillation?
Before we read more about it first let us understand what is oscillation?
Oscillation is the repetitive variation, typically in time, of some measure about a central value or between two or more different states.
It was too technical but no worries we will see it with an example it would help. So earth revolves around the sun and it takes 365 days to complete one rotation and that’s a year and again after 365 days, the earth would complete one rotation and so on.
Now time is bound here and that too after a particular time it happens again that is oscillation.
So this was in simple Lehman terms, Oscillation.
What is a Price Oscillator?
Price oscillator is an indicator that shows when particular crypto is overbought or oversold. So this can help in confirming the trend of the market whether it would go up or it would come down. Because if it is in an overbought state then it is frequently observed that prices fall since bears remain on the lookout to take over the market. Similarly, if it is in an oversold state, bulls might be around the corner to buy and take over the market. You can find the Price Oscillator indicator on TradingView.
What formula price oscillator uses?
The price oscillator works on two moving averages one shorter period moving average and one longer period moving average.
So when a shorter period moving average crossover longer period moving average then it is considered to be a good buy signal or in trading terms a bullish crossover.
Likewise when a shorter period moving average goes below a longer period moving average then it is considered to be a sell signal or in trading terms bearish crossover.
How to gain returns by using Price Oscillator?
It is really hard to tell because no one is 100 percent perfect and to generate income from trading using a price oscillator, is possible but not 100 percent.
So before being a perfect trader one must master the indicator and also look at various aspects such as chart and global trends and even politics or change of government can also lead the price to go up and down. This was all about the price oscillation. We tried to keep it simple but complete. Thank you for reading the article.