An Introduction to Klinger Oscillator

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Introduction

Many indicators are designed for the financial markets, indicators like the Klinger Oscillator which we will be discussing in this post among the Indicators that we can use, and potential price trends and reversal of whatever asset that we want to analyze.

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Klinger Oscillator

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As we have said from the beginning it is an indicator that helps traders, investors, and anyone interested in analyzing the financial markets to identify the potential price trends and reversal of an asset (currency) by analyzing the price movements and volume of the asset at the same time.

I like talking about founders in my posts, when I am discussing technical indicators, in the case of the Klinger Oscillator (KO), its founder is Stephen Klinger who developed the indicator a long time ago, to assist traders in analyzing the financial markets.

Klinger Oscillator, makes use of a mix of long-term and short-term moving averages (MA) to create a signal line, so traders, investors, and financial analysts would be able to understand potential reversal and market momentum.

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How Klinger Oscillator Works

• The Klinger oscillator works in different ways which the most is calculating a volume force, based on the changes in the price of an asset and the volume of the traded asset (currency).

• After calculating both volume force, volume, and changes in the price of the asset, it then applies two moving averages (MA): shorter and longer terms to the volume force to have a difference between the MA.

• Talking about the differences between the two added MAs, the two MA what generate the Klinger Oscillator line as we have seen in the screenshot image.

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• The Klinger Oscillator line is the line that is plotted alongside a single line of a 13-period MA of the Klinger oscillator.

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Formula

KO=34 Period EMA of VF−55 Period EMA of VF

In the given formula above, below is what the abbreviation stands for

Abbreviations	Meaning
KO	Klinger Oscillator
VF	Volume Force
Volume force	V×[2×((dm/cm)−1)]×T×100
V	Volume
T	Trend
Trend	1 if (H+L+C)>(H −1+L−1 +Cv −1)

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Signals

• Crossovers:
  As a trader, a crossover in the Klinger Oscillator is when you have seen that the Klinger Oscillator line has crossed above the signal line, indicating potential buying signals since the crossover is a representation of positive market momentum.

On the other hand, when you see that the KO has crossed below the signal line, indicating a potential selling sign you should know it is suggesting you place a sell order.

• Overbought Condition:
  In the Klinger Oscillator, an overbought condition is when the Klinger Oscillator has reached extremely high or low. When you have seen that the value of KO is extremely high then you should know the market is overbought.

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• Oversold:
  This is the opposite of overbought, which is a condition when the value of KO is extremely low. Also oversold can be a possible trend reversal.

• Divergence:
  This is when the price of the asset you are analyzing is making new highs or lows but the Klinger Oscillator is not responding, it may likely be a signal for a potential reversal in the trend.

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Disclaimer

_{This post that you have just read is purely for educational purposes and not investment advice the purpose of the post is to introduce the Klinger oscillator indicator to you and to share my knowledge about the indicator with you.}

Reference 1 and Reference 2