Description

• Developed by Mel Widner, RainOsc is based on multiple moving averages which helps to catch trends and gives over bought/sold levels
• It derives its value from indicator – (rainbow charts) which uses 2 period moving averages and then applies recursive smoothing to form 9 additional averages
• RainOsc uses the difference between highest high and lowest low price value to relate difference between current price and average of 9 averages, developing an oscillator which moves above and below zero level
• This is the only study which is an average used similar to other trend catching studies

Interpretation

• If indicator value reaches above 80 level, stock is overbought.
• If indicator value reaches below 20 level, stock is oversold

Default Parameters Used/Inputs

• Price Line

Returns/Output

Rainbow Osc values of stock for the specified period

Formula

RainbowOsc = 100*(prc-
((MA+r1+r2+r3+r4+r5+ r6+r7+r8+r9)/n))
/ (HHV(Prc, n)- LLV(Prc, n))