SMI Ergodic Oscillator on Gold

What it shows

Red columns stand on a zero line below the candles. They grow when the SMI pulls away from its Signal and shrink as the two lines come back together. The columns cross zero where the lines cross.

How Pravex works it out

1. Work out the SMI the same way as the SMI Ergodic Indicator: smooth the close’s change with an EMA over the first smoothing length, then again over the second.
2. Do the same to the absolute change, and divide the first result by the second. The ratio runs from -1 to +1.
3. An EMA of that ratio, over the signal average length, gives the Signal line you never see here.
4. Oscillator = SMI − Signal, drawn as columns.
5. Say the SMI reads 0.25 and its Signal 0.15 (invented values): the column stands at 0.10.

Settings

Setting	Default	What changing it does
First smoothing length	20	The first, slower EMA applied to the changes. A longer value gives smaller, steadier columns.
Second smoothing length	5	The second EMA applied on top of the first. A shorter value keeps more of the recent swings.
Signal average length	5	The EMA length behind the hidden Signal. A longer Signal trails the SMI more, which makes the columns larger.

How traders read it

The zero line is where the SMI crosses its Signal. Columns above zero say the SMI is above the Signal, and columns below say it is under it. A switch of side marks a change in momentum.

Column height carries its own hint. Bars that shrink toward zero say the SMI is slowing against its Signal, often before the cross itself.

Because it is a difference, the histogram is small in size. Compare its columns against its own past peaks, and use the SMI Ergodic Indicator to see the two lines behind it.

When it misleads

The columns change side at every cross of the two lines, so in a sideways market they flicker around zero. It says nothing about the SMI’s level, so a column of the same height can occur near +0.5 or near -0.5. On small, calm gold candles the columns shrink toward nothing, and any flip there is a small difference.

Questions and answers

What does a tall SMI Ergodic Oscillator column mean?

The SMI has pulled far from its Signal, so momentum is speeding up in that direction. Compare it with the tallest columns of recent weeks, since the values are small in absolute size.

Can I make the columns flip less often?

Yes. Lengthen the first smoothing from its default of 20, or the signal from 5. The columns get steadier and turn later; shorter numbers do the opposite.

SMI Ergodic Oscillator vs the Indicator?

The calculation is the same. The Indicator draws the SMI and its Signal. The Oscillator draws their difference.

Why do the columns cross zero when the lines cross?

The column is the SMI minus its Signal. It is zero where the two are equal, which is exactly where the lines cross.

Related: SMI Ergodic Indicator, True Strength Index, Percentage Price Oscillator, every indicator.