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  39. Ultimate Oscillator
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Ultimate Oscillator (ULTOSC)

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The Ultimate Oscillator is sensitive to buying and selling pressure and offers reliable signals.

Larry Williams developed the Ultimate Oscillator to address the problems experienced with most oscillators when used over different lengths of time.
Signals are based on divergence and a breakout in the Oscillator's trend, as well as overbought and oversold levels.
Williams noted that the value of oscillators can vary greatly depending on the number of time periods used during the calculation. The Ultimate Oscillator, therefore, uses weighted sums of three oscillators which represent short, intermediate, and long term market cycles (7, 14, & 28-period). It is plotted as a single line on a vertical scale of 0 to 100.

The three oscillators are based on Williams's definitions of buying and selling "pressure."

Williams recommends that you initiate a trade following a divergence and a breakout in the Ultimate Oscillator's trend.


A Buy signal is offered when:

  1. A positive or bullish divergence occurs between the Oscillator and the price.
  2. The Oscillator falls below 30 and then rises above the previous high established during the divergence (the actual buy signal).
A Sell Signal is offered when:
  1. A negative or bearish divergence occurs between the Oscillator and the price.
  2. The Oscillator rises above 70 and then falls below the previous low established during the divergence (the actual sell signal).
Closing existing positions:
  1. Close long positions when the oscillator exceeds 70.
  2. Close short positions when the oscillator goes below 30.

Please remember that, as with most indicators, these signals should be confirmed by other indicators before being acted upon.


  • Period1 (7) - the number of bars, or interval, used in the first calculation
  • Period2 (14) - the number of bars, or interval, used in the second calculation
  • Period3 (28) - the number of bars, or interval, used in the third calculation
  • Range (100) - defines the verticle scale (0-100)


  • Calculate Today's "True Low (TL)". TL = the lower of today's low or yesterday's close.
  • Calculate Today's "Buying Pressure (BP)". BP = Today's close - Today's TL.
  • Calculate Today's "True Range (TR)". TR = the higher of 1.) Today's High - Today's Low; 2.) Today's High - Yesterday's Close; 3.) Yesterday's Close - Today's Low.
  • Calculate BPSum1, BPSum2, and BPSum3 by adding up all of the BPs for each of the three specified time frames.
  • Calculate TRSum1, TRSum2, and TRSum3 by adding up all of the TR's for each of the three specified time frames.
  • The Raw Ultimate Oscillator (RawUO) is equal to:
    4 * (BPSum1 / TRSum1) + 2 * (BPSum2 / TRSum2) + (BPSum3 / TRSum3)
  • The Final Ultimate Oscillator is equal to:
    ( RawUO / (4 + 2 + 1) ) * 100

Note: The '*' sign in the above formula denotes multiplication.


The Ultimate Oscillator can be used on intraday, daily, weekly or monthly data. The time frame and number of periods used can vary according to desired sensitivity and the characteristics of the individual security.

It is important to remember that overbought does not necessarily imply time to sell and oversold does not necessarily imply time to buy. A security can be in a downtrend, become oversold and remain oversold as the price continues to trend lower. Once a security becomes overbought or oversold, traders should wait for a signal that a price reversal has occurred. One method might be to wait for the oscillator to cross above or below -50 for confirmation. Price reversal confirmation can also be accomplished by using other indicators or aspects of technical analysis in conjunction with the Ultimate oscillator.

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