Trading the cryptocurrency market using ultimate oscillator indicator

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trader,blockchain technologist and contentpreneur.Also founder and ceo at teacher forex sc... [more]

4 years ago

Ultimate oscillator is an oscillator indicator.

As an oscillator indicator,Ultimate oscillator indicator was created by Larry Williams to help traders know the direction of the market as well as to know whether the market is in an overbought or oversold condition. By helping traders to know the direction of the cryptocurrency market,it normally applies the concept of divergence.Ultimate oscillator is also used to measure the price momentum using three time frames, 7,14 and 28.

Therefore,since ultimate oscillator is based on divergence, it therefore follows that when the price in the market is falling while the ultimate oscillator is rising,the price will reverse and start moving upward in the same direction as the ultimate oscillator.On the other hand,when the price of a given cryptocurrency market is rising while the ultimate oscillator is falling,the ultimate oscillator will also reverse and start moving downwards in the same direction as the ultimate oscillator. We will not use charts to go into detalails for this.Instead,we will consider the overbought and oversold charts since most traders depend on them to enter the market.

1. Ultimate oscillator,oversold market

Since ultimate oscillator is an oscillation indicator,it can be seen oscillating from 20 to 80.This makes it to work on the same concept like RSI. Therefore,when the ultimate oscillator falls below 30,that will be an indication of an oversold market condition thus signalling the cryptocurrency trader to purchase a given amount of cryptocurrency with their USDT balance. As a cryptocurrency trader,one can either place a market buy order or a limit buy order. For market buy order,the transaction will be processed upon the placement of the order while for limit buy order,the transaction will be executed when the price in the market reaches the buy limit order price. This is indicated as from the candlesticks chart below;

In the above chart,two points are being indicated. There is point A and point B. Point A represents the ultimate oscillator while point B represents the oversold point. At point B, the ultimate oscillator has fallen below 30 thus an indication of an oversold condition over there. This signals the cryptocurrency trader to purchase a given amount of TRX with their USDT balance. The trader can choose to use market buy order or limit buy order. The market buy order will instantly be processed while the limit buy order will be processed when the price in the market reaches a buy limit order. When the order is being processed,the account of the trader will start increasing in value if the market is moving upwards.

2. Ultimate oscillator overbought market

Since ultimate oscillator is an oscillation indicator,it can be seen oscillating from 20 to 80.This makes it to work on the same concept like RSI. Therefore,when the ultimate oscillator rises above 70,that will be an indication of an overbought market condition thus signalling the cryptocurrency trader to sell a given amount of cryptocurrency which he had previously purchased and is currently holding. The cryptocurrency trader may decide to use a market sell order which will be processed instantly or a limit sell order which will be executed when the price in the market reaches their limit sell order.This is indicated as from the candlesticks chart below;

In the above chart,two points are being indicated. There is point A and point B. Point A represents the ultimate oscillator while point B represents the overbought point. At point B, the ultimate oscillator has risen above 70 thus an indication of an overbought point over there. This signals the cryptocurrency trader to sell a given amount of TRX which he had previously purchased and is currently holding to avoid declining the value of their trading account. The trader can place a market sell order or a limit sell order. The market sell order will instantly be processed while the limit sell order will be processed when the market reaches their limit sell order price. When the processing of their order is completed,their account will be seen to have increased in value in terms of USDT.