High Low Range Oscillator is VTL Client Side Indicator. It is an improvement on the stochastic oscillator. It uses the median price in its calculations instead of the closing price used by stochastic oscillator. This makes the oscillator more sensitive to tail formations in charts. Like the stochastic oscillator, High Low range oscillator also oscillates between 0 and 100. HLR oscillator shows the overbought oversold market conditions. Values above 80 level is usually considered as oversold and overbought level is below the 20 level. Oscillator value above zero is taken as uptrend and below zero is taken as down trend.
The HLR oscillator is used to generate trading signals in a variety of methods. When price is over bought or oversold, there is high probability that a price reversal will follow. This can be confirmed with other indicators and counter trend positions can be opened. The oscillator crossing the middle line 50 from below it can be taken as a buy signal and opposite cross over can be taken as a sell signal. More reliable signals are the divergence between price and the oscillator. When price makes a new high but the oscillator is declining from its highs, it is clear indication that price reversal is imminent. The opposite situation, price making new lows but oscillator rising, odds favor the end of the down trend.
The parameter HLR Range is the period for the indicator calculation; its default value is 40. Parameter values are set in the VTL editor.
Hi_Lo_Range_Oscillator.zip (3.48 KB)