Chande Momentum Oscillator (CMO)

The Chande Momentum Oscillator (CMO) is a technical analysis indicator developed by Tushar Chande. It measures the speed and direction of price movement, allowing you to assess the current strength of a trend and potential reversal points.

How CMO Works

• Range: from -100 to +100.
• Key Zones:
  • Above +50 — overbought, the market may be overheated.
  • Below -50 — oversold, a quick recovery is possible.
  • 0 — neutral level.
• Positive values → bullish pressure prevails (upward trend).
• Negative values → bearish pressure prevails (downward trend).

How to use in trading

1. Zero Level Crossing

   • Crossing from bottom to top → signal of the possible start of an uptrend.
   • Crossing from top to bottom → signal of the start of a downtrend.

   

2. Leaving the overbought/oversold zones

   • Returning downwards from the zone above +50 → Sell-signal (open Short).
   • Returning upwards from the zone below -50 → Buy-signal (open Long).

   

3. Trade Filtering

   • When combined with trend indicators (e.g., MA, ADX), CMO helps filter out false signals.

Limitations

• The effectiveness of CMO depends on the selected timeframe and asset — period settings should be adjusted individually.
• In highly volatile markets, the oscillator may cross key levels more frequently, requiring additional filtering.
• CMO is best used in combination with support and resistance level analysis.

Click the “Pencil” button in the indicator settings to customize the parameters.

Summary

The Chande Momentum Oscillator offers a wide ±100 range and clear overbought/oversold levels, making it a useful directional filter in Veles bots. It works best on medium timeframes in combination with trend indicators or support/resistance levels to reduce false zero-line crossings.