PZ Oscillator MT5
The Pz Oscillator is a very smooth and responsive accelerometer which provides a lot of useful information and detects divergences automatically. It is a great trading confirmation and can be used to identify the trend direction and strength. It has been designed as a complement for our trading tools.
The oscillator plots two moving averages to display the trend direction. If the fast moving average is above the slow moving average, the market is during an uptrend and long trades can be taken. Likewise, if the fast moving average is below the slow moving average, the market is during a downtrend and short trades can be taken.
Other way to identify the market trend is by using the absolute value of the histogram. If the histogram value is above zero, the market is in an uptrend. If the histogram value is below zero, the market is in a downtrend.
The trend strength (or speed) is illustrated by the histogram. A blue bar stands for bullish momentum and a red bar stands for bearish momentum. What to do with this information at any given moment depends on the market trend. If bullish momentum appears during a downtrend, it means that the downtrend is exhausted and has stopped accelerating. Likewise, if bearish momentum appears during an uptrend, it means that the uptrend is exhausted and has stopped accelerating.
The indicator auto-detects and plots regular and hidden divergences, and while all of them can be traded, they are not meant to be traded right away. To trade divergences successfully you have to put together the trend direction and strength, explained above. The following is the perfect situation for a bearish divergence:
- The fast moving average of the oscillator is above zero
- The oscillator displays an uptrend (fast ma > slow ma)
- The oscillator displays bearish momentum (red histogram)
- The oscillator detects a bearish divergence
Likewise, the following is the perfect situation for a bullish divergence:
- The fast moving average of the oscillator is below zero
- The oscillator displays a downtrend (fast ma < slow ma)
- The oscillator displays bullish momentum (blue histogram)
- The oscillator detects a bullish divergence
When one of these two scenarios is met, please don't enter the market automatically. You have to wait until a price action signal confirms that the market is ready to reverse. This price action signal can be, for example, one of the following:
- A Reversal Candlestick Pattern
- A Price Breakout
- Heiken Ashi
- Parabolic Sar
- You name it! What really matters is waiting for the market to move first
- Customizable main and averaging period
- Regular divergences can be enabled or disabled
- Hidden divergences can be enabled or disabled
- Oscillator lines can be displayed or hidden
- Line colors and widths can be changed
- Visual, sound, mail and push alerts for divergences
- Visual, sound, mail and push alerts for trend changes
The Pz Oscillator is an awesome confirmation for the following trading tools.
Arturo López Pérez, private investor and speculator, software engineer and founder of Point Zero Trading Solutions.