OsHMA indicator (Hull Moving average of oscillator) – is a VertexFX client side VTL indicator that determines the start of new trends. The hull moving average of oscillator measures and plots the difference between the oscillator and the oscillator’s smoothing. When divergence appears between OsHMA and the price, it indicates a high probability that the current trend will finish soon.
The discrepancy of the price and OsHMA indicator is a trustworthy signal. The OsHMA is not to be confused for moving average oscillator which works in a different set of principles and is calculated differently. The OsHMA indicator determines the relationship between trend and the price, signaling overbought or oversold conditions in the market.
OsHMA indicator has some distinctive signal triggers. When the OsHMA switches from declining to rising histogram, it alerts traders to a rising bullish trend and similarly when the OsHMA switches from rising to declining histogram, it indicates a change to a bearish trend.
The formula for calculating OsHMA: OsHMA = MACD - SIGNAL (difference between the two values). MACD = HMAs (P, N) - HMAs (P, N), SIGNAL = SMA (MACD, N), where:
HMAf - fast hull moving average (short term);
HMAs - slow hull moving average (long term);
SMA - simple moving average (signal line);
SIGNAL - smoothing the simple moving average;
N - number of periods taken for the calculation;
P - price (Close, Open, High, Low, Typical Price, Median Price).
How to Use OsHMa Indicator Extremum points:
- OsHMA switching from falling to rising in extreme areas may be a sign of bullish reversal;
- OsHMA switching from rising to falling may be a sign of bearish reversal.
Crossing zero axis:
- OsHMA rising above zero (corresponds to MACD crossing from below its signal line) generates a buy signal;
- OsHMA falling below zero (corresponds to MACD crossing from above its signal line) generates a sell signal.