Description:
The LBR 3-10 Oscillator is a technical analysis tool that uses two moving averages (3-period and 10-period) to identify potential market trends and reversals. Traders watch for crossover points and divergences between the oscillator line and the price chart to signal buying or selling opportunities.
Input Parameters:
- Fast: A moving average that reacts quickly to recent price changes, commonly used for short-term trend analysis.
- Slow: A moving average that responds more slowly to price fluctuations, useful for identifying longer-term trends.
- Signal: The signal line is a 16-day EMA for this indicator.
- MA Type: Select the moving average type such as EMA, SMA, or HullMA.
- Price Source: The specific data points (such as open, high, low, or close) from each candle in a financial chart that an indicator uses for mathematical computations, enabling the calculation of metrics like the average over a specified period.
Use Cases:
- Trend Identification: Traders use the LBR 3-10 Oscillator to identify the direction of the market trend. When the 3-period moving average is consistently above the 10-period moving average and the oscillator line is above the zero line, it suggests bullish momentum, indicating a potential uptrend. Conversely, when the 3-period moving average is consistently below the 10-period moving average and the oscillator line is below the zero line, it suggests bearish momentum, indicating a potential downtrend.
- Overbought and Oversold Conditions: The LBR 3-10 Oscillator can also help identify overbought and oversold conditions in the market. When the oscillator line moves into overbought territory (typically above a certain threshold, like +100), it suggests that the market may be overextended to the upside, and a reversal or pullback could be imminent. Conversely, when the oscillator line moves into oversold territory (typically below a certain threshold, like -100), it suggests that the market may be oversold, and a bounce or reversal to the upside could occur.
- Divergence Analysis: Traders often use divergence analysis with the LBR 3-10 Oscillator to spot potential trend reversals. Divergence occurs when the price chart makes a new high (or low), but the oscillator fails to confirm it, creating a non-confirming higher high (or lower low). Bullish divergence occurs when the price makes a lower low, but the oscillator makes a higher low, suggesting weakening bearish momentum and a potential trend reversal to the upside. Conversely, bearish divergence occurs when the price makes a higher high, but the oscillator makes a lower high, indicating weakening bullish momentum and a potential trend reversal to the downside.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our blogpost.