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Stochastic Slow and OBV Percent Oscillator

6910
  • Purpose - Stochastic is the best momentum indicator and On Balance Volume (OBV) is the best volume indicator. Why not combine both to come up with a more sophisticated oscillator?

  • How It's Done - I had to put OBV as an oscillator (returning values between 0 and 100) in order to put it in the same pane with the slow stochastic oscillator. Otherwise, their synergy won't be that great. So, I have decided to visualize OBV as a percentage relative to selected period's high and low value. That way, I can keep the OBV value to stay within [0, 100] boundary.

  • Interpretation

    1. Dot color indicates the whether the stochastic K/OBV is over or below the stochastic D/Signal line.

    2. When Stoch and OBV are moving in the same direction and are close together (on top of each other), this indicates a strong trend

    3. When Stoch crosses up or down the OBV oscillator, it may indicate a trend reversal

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