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2011issue C0628-35

Price-zone oscillator trend-regime rules

Treat this close-only oscillator as a checklist. Classify trending versus sideways first, then require a named zone crossing so the setup is a testable hypothesis rather than a visual impression.

  • The price-zone oscillator depends only on whether today's close is above or below yesterday's close, scaled from a signed exponential average of closes against an exponential average of closes.
  • A sixty-day EMA separates bullish from bearish conditions only when a 14-period ADX is above 18; below that ADX reading the market is treated as sideways.
  • In an uptrend, listed long setups include an oversold reversal through -40 and a failed retracement confirmed by a recross of zero or +15.
  • When the market is sideways, price versus the sixty-day EMA is ignored and a listed buy remains the oscillator crossing up through -40.
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Current trackCandlestick patterns100 readings

Read the oscillator as a checklist

Editorial framing: treat the price-zone oscillator as a regime-aware checklist rather than a shape to interpret by eye. First decide whether price is trending or sideways. Then require a specific zone crossing before acting, so the chart condition is a falsifiable hypothesis.

The price-zone oscillator is defined as 100 times closing position divided by total close. Closing position is an X-day exponential average of the signed close. Total close is an X-day exponential average of the close.

The signed close is bullish when today's close is higher than yesterday's close and bearish otherwise. The oscillator therefore depends only on that close-to-close condition.

The same seven zones as the volume counterpart

The indicator is presented with the same seven oscillator zones as the volume-zone oscillator: +60 extremely overbought, +40 overbought, +15, zero, -5, -40 oversold, and -60 extremely oversold.

Uptrend buys and listed exits

An uptrend is defined as price above the sixty-day EMA and ADX above 18. One listed buy rule is an oversold reversal: the oscillator crossing from below -40 to above -40.

During that uptrend, a failed retracement that does not reach -40 can be treated as a buy when the oscillator recrosses from below zero to above zero, or more conservatively from below zero to above +15.

Listed exits from a long in that uptrend include the oscillator turning down from above +60, a negative divergence at an extreme followed by a break below +40, or price falling below the sixty-day EMA with the oscillator below zero.

Downtrend shorts and sideways markets

A downtrend is defined as price below the sixty-day EMA and ADX above 18. One listed short rule is an overbought reversal: the oscillator crossing from above +40 to below +40.

When ADX is below 18, price versus the sixty-day EMA is ignored. A listed buy is still the oscillator crossing up through -40. The complementary volume-zone oscillator is described as rarely reaching +60 or -60 in that state.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
36 of 54 in the Candlestick patterns track
201140-43 pp.Next on Candlestick patternsA candlestick checklist before commodity entriesA candlestick buy signal in an oversold reading, and a sell signal in an overbought reading, are presented as raising the chance of a reversal rather than as standalone orders.
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  36. 2011Price-zone oscillator trend-regime rules
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  48. 2017Nine-zone filter for decade-level breakouts
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