The Ultimate Oscillator is one of the types of the oscillators, and it is based on three periods for performing of calculations. This indicator, as well as the usual oscillator, shows overbought and oversold zones. The signal to buy the Put binary option appears when the indicator’s line leaves the overbought zone and crosses the central line 50 from up to down. The signal to buy the Call binary option appears when the indicator leaves the oversold zone and crosses the central line from down to up. Also, you can use the divergence signals when trading with this binary options’ indicator.
The Ultimate Oscillator binary options’ indicator shows the overbought and the oversold zones in the market. The comparison of the current tool’s price with the previous values within three periods is the basis of this indicator’s work. The indicator’s line is visually located between levels 0 and 100. When the line of the Ultimate Oscillator binary options’ indicator declines lower than 30, the oversold condition of the trading tool is observed in the market. When the indicator’s line is located higher than 70, the overbought condition of the trading tool is observed in the market.
Three periods for the calculation are used within this binary options’ indicator. It is natural that periods with different length are taken into account. However, it’s necessary to note that each shorter period is included in the longer one. For example, if we take the periods 7, 14, and 28 for calculation, the first one of them will be used for calculation for three times. The second period will be used only twice. And the third period will be used once.
The Ultimate Oscillator binary options’ indicator applies the special formula, and it uses this formula to calculate the line’s values on a chart. But a trader can set his own values for periods. It depends up the time scale, the asset’s volatility, and the preferences of a trader.
The Ultimate Oscillator indicator is similar to many other oscillators by its essence. For example, it is similar to the Stochastic, StochRSI, the William’s indicator, and so on. As already mentioned above, the indicator includes zones above 70 and below 30. In these zones, the indicator’s line shows that the asset is either overbought or oversold. But the fact that the indicator’s line is located within one of these zones doesn’t mean that the clear signal to buy binary options has appeared. This is because a market can continue to move in the same direction for some time. Therefore, the indicator can stay in either oversold or overbought zones for this entire time. For this reason, it’s necessary to wait until the line of the binary options’ indicator leaves one of these zones and crosses the central line.
For example, if the Ultimate Oscillator binary options’ indicator had been located in the overbought zone, in other words, above 70, and left this zone and crossed the central line from up to down, the signal to buy the Put binary option appears. And if the indicator’s line had been located in the oversold zone and then crossed the central line from down to up, the signal to buy the Call option will appear. Also, when working with this indicator, a trader can use signals which are sent by the bearish and the bullish divergences.
The Ultimate Oscillator binary options’ indicator can be used together with the other auxiliary tools in order to send clearer signals.