You can join a Telegram community and chat with other traders to discuss, share and ask for help. You do not have to use the SMA default settings of 50, 100 and 200, we use the settings below to simply use this indicator to tell us if we should buy or sell. The cTrader Elliott Oscillator works best when the chart has the right number of bars displayed this is usually between 100 to 150. Bill Williams suggests around 100 to 140 bars and Tom Joseph mentions that about 150 is a good number. We can also use the EWO on multiple charting timeframes, from the 1-minute time compression all the way up to the monthly (or higher if such a setting exists on your charting software). For shorts, this means a negative EWO value of a certain magnitude, a decreasing EWO value, and a negatively sloped SMA.
Getting the Elliott Wave Oscillator onto your charts is actually pretty simple. I remember when I first tried to add custom indicators—it felt overwhelming. It can be applied to any time frame and works just as well in every time frame provided that the correct number of bars are displayed in the chart.
- It’s like test-driving different configurations before committing to one.
- First, make sure you have the cTrader trading platform installed and then simply unzip the file and double-click on it to automatically install onto the platform.
- The Elliott Wave Oscillator (EWO) is a mainstay among technical indicators for developing robust trading strategies that are rooted in precise market predictions.
- The cTrader Elliott Oscillator is also known as a 5 & 34 Oscillator, this is because it uses a 34-period slow moving average and a fast 5-period moving average indicator.
- If the EWO is both negative and increasing, this is doubly bearish.
T3 Moving Average Indicator
This continued until orange bars appeared, suggesting that bearish momentum was weakening. As the histogram showed small bearish and bullish bars, it signaled a sideways market with low momentum. Once the bars turned red, it signaled the start of a downtrend and a good short entry. As seen in the indicator window, the bearish trend continued with a strong initial drop, followed by a brief correction and further decline, presenting a clear selling opportunity for traders. This could include the use of price, support and resistance levels, different technical indicators, and fundamental analysis of the market being traded.
- The 5-period moving average, on the other hand, is based on 20% of the previous candle’s closing price.
- This helps in consolidating markets where frequent moves above and below the indicator’s zero line can give multiple weak signals.
- Our long criteria – positive EWO, EWO of +0.05 or higher, increasing EWO, and positively sloping 50-period simple moving average – also held throughout.
- The percentage option is genuinely useful when you’re trading multiple instruments or switching between timeframes.
- The Elliott Wave Oscillator (EWO) Indicator for MetaTrader 5 is a momentum-based histogram tool that calculates the difference between a fast and a slow-moving average based on price action.
The Elliott Wave Oscillator (EWO) Indicator for MetaTrader 5 is a momentum-based histogram tool that calculates the difference between a fast and a slow-moving average based on price action. Three additional simple moving averages are used to determine a bullish, bearish and neutral trend. This indicator will allow the trader to set different periods for these indicators, but as default, they are 20, 100 and 200 periods.
Optimizing Trade Decisions with EWO Technical Indicator
Delving into its foundations, we appreciate how the oscillator is steeped in the oscillation of investor sentiment—the beating heart of market dynamics. It’s this unique synthesis of technical analysis with deep psychological patterns that sets the EWO apart, providing a sophisticated compass for navigating the seas of market volatility. It is more common for the EWO, and other moving average crossover indicators, to be used to confirm trade ideas generated from the price chart. If trade ideas are signaled by the EWO, they should be rigorously filtered with other tools. The EWO on its own will produce a ton of signals due to the natural frequency of 5-SMA and 35-SMA crossovers.
Alligator Oscillator
The real value comes from understanding what the indicator is telling you about market momentum and using that information as one piece of your trading puzzle. Test it thoroughly, start small, and always remember that the market can stay irrational longer than you can stay solvent. But here’s the thing—and I can’t stress this enough—don’t trade it in isolation. I’ve seen too many traders get excited about one indicator and forget about the bigger picture. The Elliott Wave Oscillator works best when you combine it with other tools like support and resistance levels, volume analysis, and solid risk management. You’re basically looking at the difference between two moving averages presented as a colorful histogram.
The key is to learn how to identify waves correctly is a task that is also highly subjective. This was followed by a bullish reversal, indicated by the histogram forming higher lows while the price made lower lows, a classic bullish divergence. This was followed by a bearish reversal, indicated by the histogram forming lower highs while the price made higher highs, a classic bearish divergence. Renowned for his innovative approach to financial markets, Ralph Nelson Elliott laid the groundwork for what would evolve into the highly esteemed EWO conclusion.
Rainbow Charts
Additionally, instead of a mere positive value for the EWO, we can also better improve its reliability by ensuring that for long trades, its value is sufficiently positive by a specific magnitude. For short trades, we can institute a rule where the EWO is negative by a certain amount. This helps in consolidating markets where frequent moves above and below the indicator’s zero line can give multiple weak signals. A 5-period moving average is much more responsive to price than a 35-period moving average. The 35-period moving average is slower to react to price as the previous closing price comprises just 2.9% of its value (1/35). The 5-period moving average, on the other hand, is based on 20% of the previous candle’s closing price.
The end of wave 2 is logically followed by the beginning of wave 3. As mentioned above, the most important aspect of trading with this indicator is remembering that its highest and lowest readings identify a bullish or bearish wave 3 of the swing. Wave 2, which, as we know, is a correction to wave 1, typically does not reach a new extreme in the counter-trend direction (e.g., a swing low in an uptrend) but retraces a considerable portion of wave 1. As you know, wave 4 is the other corrective wave during the with-trend momentum, so a second major correction in the Elliott Wave Oscillator will most likely be wave 4. The Elliott Wave Oscillator has a strong correlation with Elliott wave patterns, and its highest readings typically show where the third wave appears on the chart. The EWO can be applied to any time frame and will work equally well if the sample size is large enough.
Elliott Wave Oscillator Trade Criteria
We can either look at its value – positive or negative – or we can look at its rate of change. It’s not rocket science, but there are some nuances that make all the difference. First, make sure you have the cTrader trading platform installed and then simply unzip the file and double-click on it to automatically install onto the platform. TradingPedia.com will not be held liable for the loss of money or any damage caused from relying on the information on this site.
Trading forex, stocks and commodities on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. Developed by Ralph Nelson Elliott, author of the Elliott Wave Theory, the Elliott Wave Oscillator is an indicator used to determine where one Elliott wave ends and the next begins. It aims to offset one of the Elliott Wave Theory’s main weaknesses – reliance on accurate wave counting. Copyright © 2025 FactSet Research Systems Inc.Copyright © 2025, American Bankers Association.
Ulcer Index – Forex Trading
Whether you’re just starting out or you’ve been trading for years, the Elliott Wave Oscillator can be a valuable ewo indicator addition to your toolkit. Just remember to keep it simple, manage your risk, and never stop learning. When the oscillator crosses above zero, you’re potentially looking at the start of bullish momentum. I’ve learned the hard way that false breakouts happen more often than you’d think.
You can experiment with different settings, backtest your ideas, and see what actually works in your trading style—all without getting lost in Pine Script syntax. An advanced trading method like harmonic trading uses pure price action which has a determined system for price pattern recognition and Fibonacci techniques which cover the Harmonic Trading approach. IndicatorSignals.com is a suite of Metatrader and web indicators. Wave 4 usually reverses the oscillator and crosses into the opposite area beyond zero, becoming negative during a bull trend and positive during a bear trend.