The Ultimate Oscillator (UO)
The Ultimate Oscillator is a momentum indicator developed in 1976 by Larry Williams. The Ultimate Oscillator combines short, medium and long-term periods to analyze the momentum of the price. By using three different time frames the indicator is less volatile, and due to this larger number of filters, it generates fewer signals. This indicator is commonly used by traders to spot buy and sell signals based on divergences and oversold-overbought thresholds. Overbought zones are areas where the price has increased a lot in a small period of time. Then, assuming that the price is overbought and that it can have a trend reversal or correction. Therefore signaling a sell. Oversold zones are the opposite. When the price has decreased sharply in a small time span, it is likely to go back up as a trend reversal or correction.