• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Gold’s Price Oscillator
Stock

Gold’s Price Oscillator

by January 27, 2023
by January 27, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

The McClellan Price Oscillator for gold futures prices has reached a pretty high level, equivalent to what it did at the price top in March 2022, and has just now turned down. This is a bearish signal and could set off a pretty big pullback.

The McClellan Price Oscillator is a cousin of the more famous McClellan A-D Oscillator. My parents created both of these back in 1969. That research grew out of their desire to get a better signal than could be gotten from looking just at moving averages alone. Together, they wondered about finding the difference between two moving averages, and this was well ahead of when Gerald Appel did the same thing with his Moving Average Convergence-Divergence (MACD) indicator.

A McClellan Price Oscillator employs prices for any stock, index, commodity, or futures price series. One calculates two exponential moving averages (EMAs), known as the 10% Trend and 5% Trend. Those percentage numbers refer to the “smoothing constant” used in the calculation of each EMA. The smoothing constant governs how much weight is given to the most recent data, so, for calculating a 10% Trend, you would multiply today’s closing price by 10%, and then add that to 90% of yesterday’s 10% Trend value. A larger smoothing constant means a faster response to price movements.

The chart below shows the 10% Trend (red) and 5% Trend (green) for the April gold futures contract. The fact that they have become spread far apart is another way of saying that the Price Oscillator has risen to a high value, because the Price Oscillator represents the distance between those two EMAs.

This chart also shows an additional line, the blue Price Oscillator Unchanged line. It represents the theoretical closing price at which a close on the next day would mean that the Price Oscillator stays at exactly the same value as the day before. It is calculated simply as the 10% Trend plus the value of the Price Oscillator. In other words, the blue line is the same distance away from the red line as the distance that the green line is separated from the red line. I like to use the Price Oscillator Unchanged level as a trigger level, especially when we see a very extended Price Oscillator value. But it does not work every time that a drop below that blue line ends up being a good sell signal. It matters more with an overbought condition.

Because the 10% Trend and 5% Trend are tied to price levels, the amplitudes of the Price Oscillator are also going to be sensitive to price levels. Saying it another way, the higher the price goes, the bigger the swings we will see on the Price Oscillator. That does not matter much for short term analyses, but, when one wants to do a long-term comparison, it can matter a lot.

One way to compensate for that is what we call the Proportional Price Oscillator, or PPO. It is shown in this next chart:

It is calculated by taking the value of the Price Oscillator, and dividing it by the closing price, which factors out the change in price levels over time. For this chart, I go one additional step, multiplying the PPO by 1000 just to make the Y-axis values more meaningful.

What we can see from this long-term chart is that the current value of the PPO is not the highest ever, but it is still up pretty high, which merits a significant pullback in gold prices just to unstretch the rubber band and set up for the next potential up move. Such pullbacks usually continue until the Price Oscillator (and thus the PPO) gets down close to zero, or even below it.

You Might Also Like
  • Broad-Based Rally Puts Markets in Bullish Position
  • BEWARE! META, TSLA, AMZN, MSFT & AAPL Report Earnings Next Week!
  • Tech Stocks Plunge: What This Means for Investors
  • GNG TV: Looking at a Relief Rally or a Return to Go Trends?
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Stay Ahead of GDP: 3 Charts to Become a Smarter Trader
next post
Always Be Learning: Exiting Too Soon On A Losing Position

You may also like

From Selloff to Surge: Growth Stocks Rebound After CPI

January 12, 2024

Sector Spotlight: Market Entering Period of Strong Seasonality

February 28, 2023

Three Ways to Visualize the Start of a Potential Distribution...

October 23, 2024

Precious Metals and Miners Ready to Rally

May 30, 2023

Identifying Powerful Trends with This Game-Changing ADX Setup

February 15, 2024

Sector Spotlight: Bonds & Financials Crucial for Promising S&P 500

April 4, 2023

Gold Buyers Should Remember FDR

September 1, 2023

Retail (XRT) Dropping Quickly

March 14, 2025

Election Aftermath: Unleashing Profitable Small Cap Stocks

November 7, 2024

GNG TV: GO TRENDS Emerging Across the Globe!

December 30, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Junk Bonds: Best Equity Predictor

    April 11, 2023

    Watch Four Horrible Charts In The...

    August 25, 2023

    Netflix Gets Island Reversal On Earnings

    April 19, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here