Invented by Larry Williams the Ultimate Oscillator was his attempt to rectify some of the problems with most of the oscillator indicators.
Overview
Williams realized that the value of oscillators can vary greatly depending on the number of time periods used during the calculation. Therefore instead of using just one input the Ultimate Oscillator 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 and ranges on a scale from 0 to 100. By utilizing three time periods Williams believes that is able to obtain more accurate signals, but the use of the Ultimate Oscillator is still based on the simple idea of divergence.
A Buy signal is occurs when the Oscillator is moving up while the price is moving down while a sell signal happens when the conditions are reversed.
