Ultimate Oscillator (UO) on a Live Gold Chart

What it shows

The UO line sits alone in a 0 to 100 pane, with no guide lines drawn. Because it blends three windows, it moves less abruptly than a single-window oscillator and jumps less often to the edges.

How Pravex works it out

1. For each candle, find the true low (the lower of this candle’s low and the previous close) and the true high (the higher of this candle’s high and the previous close).
2. Buying pressure = close − true low. True range = true high − true low.
3. For each of the three lengths, add up buying pressure and add up true range over that many candles, then divide: sum of pressure ÷ sum of range.
4. UO = 100 × (4 × fast ratio + 2 × middle ratio + slow ratio) ÷ 7. The fast window gets the heaviest weight.

Settings

Setting	Default	What changing it does
Short window	7	The shortest window. It carries a weight of 4, so changing it moves the line the most.
Middle window	14	The middle window, with a weight of 2.
Long window	28	The longest window, with a weight of 1. A longer slow window makes the line steadier.

How traders read it

High values, usually taken as 70 and above, say closes have been sitting near the tops of their ranges. Low values, 30 and below, say near the bottoms. These are descriptions of the recent past.

The blend of three windows is the whole point. A short burst of buying that is not backed by the longer windows lifts the line less than it would lift a single fast oscillator.

Its author built it around divergence: price makes a lower low while the UO makes a higher low, which says the closes inside the candles were stronger on the second drop.

When it misleads

Weights of 4, 2 and 1 are fixed in the formula, so the fast window always dominates, and the true range includes gaps from the previous close, which is the only place a gap counts. A strong trend keeps the line at one end for long stretches. On gold, quiet candles with a very small range make the ratios noisy, because small sums are divided by small sums.

Questions and answers

What do the weights 4, 2 and 1 do?

The fast window counts four times as much as the slow one, and the middle window twice as much. The sum is divided by 7 so the result stays between 0 and 100.

What UO level counts as high?

The usual marks are 70 for high and 30 for low. Pravex draws no lines at these levels, so read them off the pane’s scale.

Can I change the lengths?

Yes. The short window (7), middle window (14) and long window (28) are all inputs. Keep the order from fast to slow, or the weights no longer match the idea of a short, middle and long window.

Why does the UO count the previous close?

Buying pressure is measured from the true low, which is the lower of this candle’s low and the last close. A candle that gaps up and holds gets credit for the gap. Without it, a gap-and-hold candle would look weaker than it was.

Related: Relative Strength Index, Stochastic, Williams Percent Range, Awesome Oscillator, every indicator.