#1 Comprehensive guide to use the Ultimate Oscillator. + Divergence trading strategy for IQ Option

Ultimate Oscillator on IQ OptionIn 1976, Larry Williams invented the Ultimate Oscillator. As you can see, this indicator has stood the test of time and is still with us today. It is also built into the IQ Option platform. Today is a great opportunity for me to introduce you to the construction and operation of this oscillator.

Key TakeawaysπŸ”‘

β†’The Ultimate Oscillator (UO) is a versatile and reliable momentum indicator created by Larry Williams in 1976.
β†’UO combines three timeframes, reducing false signals and allowing for the identification of both bullish and bearish divergences.
β†’Trading with UO involves the careful interpretation of signals and the use of additional technical analysis tools for confirmation.

How does the Ultimate Oscillator work?

Many momentum oscillators are trapped in a single timeframe and so they accelerate sharply at the start of a strong rally and then form a bearish divergence as the rally continues. In opposition, the Ultimate Oscillator (UO) incorporates longer timeframes into its formula and the signals based on both, bullish and bearish divergences can be identified.

Adding the Ultimate Oscillator to the IQ Option chart

Log in to your trading account. Choose the chart type for a favoured asset. Then, click on the Indicators icon. You will find the Indicators tab there. Click on Momentum and select the Ultimate Oscillator from the list that has unfolded on the right side.

How to insert Ultimate Oscillator on IQ Option platform
How to insert the Ultimate Oscillator on the IQ Option platform

You can also type the name of the indicator needed in the search box.

The Ultimate Oscillator will be visible below the price chart in the separate window.

The Ultimate Oscillator on EURUSD daily chart
The Ultimate Oscillator on the EURUSD daily chart

The UO takes three different timeframes in the calculations. It reduces false divergences. Signals to buy are based on a bullish divergence and to sell on a bearish divergence.

Trading with the Ultimate Oscillator

Opening long positions on IQ Option

To open a long position with the UO three things must happen. The first is a bullish divergence. It occurs when the oscillator creates a higher low but the price forms a lower low. The second thing is that the low of the Ultimate Oscillator should be placed below the line of value 30. And the third step is to wait for the oscillator to rise beyond the high of the divergence.

Buy when price break the local resistance after bullish divergence
Buy when the price breaks the local resistance after a bullish divergence

Opening short positions with the Ultimate Oscillator

There should be a bearish divergence observed between the oscillator and the price. The UO should form a lower high while the price creates a higher high. The oscillator high should be noted above the line of the value of 70. And the last thing is that Ultimate Oscillator should fall beneath the low of the bearish divergence. This will confirm an upcoming reversal.

Sell when price breaks the local support after a bearish divergence
Sell when the price breaks the local support after a bearish divergence

Pros and Cons of Using the Ultimate Oscillator (UO)πŸ‘πŸ‘Ž

  • Pros:
    • Combines three timeframes, reducing false signals πŸ’‘
    • Identifies both bullish and bearish divergences πŸ“ˆπŸ“‰
    • Works on various chart timeframes 🌐
    • Customizable settings for different assets and market conditions πŸ”§
  • Cons:
    • May generate false signals in highly volatile markets ⚠️
    • Requires additional technical analysis tools for confirmation πŸ”
    • Not as widely used as some other oscillators πŸ“Š

Comparison between Oscillators Ultimate Oscillator RSI Stochastic Oscillator
Timeframes Combines three timeframes Single timeframe Single timeframe
False divergences Reduced More common More common
Customizability High Moderate Moderate

Getting more signals from Ultimate Oscillator

You can successfully use the Ultimate Oscillator on different timeframes. However, it might be a good idea to play with its settings. Some securities and stocks may not show oversold and overbought readings when the UO has default settings. By decreasing the timeframe to Β 4, 8, 16 you will increase the sensitivity of the oscillator and generate more trading signals at the same time. For securities that are characterised by high volatility, you should do the opposite that is to diminish sensitivity by lengthening the timeframes.

hanging the default settings to 4,8,16
You can get more signals by changing the default settings to 4,8,16

Which oscillator is best?

Oscillators are very popular among traders. In fact, it is difficult to choose the best one. First of all they work in a similar way and with identical settings they will give signals in similar places. Secondly, as always, as many users, as many opinions. I personally like the RSI and the Stochastic Oscillator. But I would put Ultimate Oscillator on a par with those indicators. It is just as good. I give an extra plus to Williams for giving the indicator a name, which certainly contributed in some way to its popularity.

It is possible to use the Ultimate Oscillator on intraday, daily, weekly or monthly charts. This indicator combines three timeframes and produces signals based on bearish and bullish divergences.

Change the default parameters depending on what kind of asset you are trading.

You can also get a confirmation of trading signals by using additionally chart patterns, extra indicators or other technical analysis tools available on the IQ Option platform.

Log in to your demo account to get to know the Ultimate Oscillator well. Here, you will not lose your money. After some practice shift to the live account to generate profits.

Best of luck!

Q&A πŸ’‘

  • Q: How does the Ultimate Oscillator differ from other oscillators?
    A: The Ultimate Oscillator combines three timeframes, reducing false divergences and improving the accuracy of trading signals.
  • Q: Can the Ultimate Oscillator be used across different assets and time frames?
    A: Yes, the Ultimate Oscillator can be used across various assets and timeframes, such as intraday, daily, weekly, or monthly charts. Adjust its settings accordingly to optimize its performance for the specific asset and timeframe.
  • Q: How can I reduce false signals generated by the Ultimate Oscillator?
    A: Adjusting the settings of the oscillator can help you reduce false signals. For more volatile assets, consider lengthening the timeframes, while for less volatile assets, shorten the timeframes.
  • Q: Is the Ultimate Oscillator a standalone trading tool?
    A: While the Ultimate Oscillator can provide valuable insights, it’s recommended to use it in conjunction with other technical analysis tools, chart patterns, or indicators for more reliable trading signals.
  • Q: How do I know when to open a long or short position using the Ultimate Oscillator?
    A: Open a long position when you observe a bullish divergence, the low of the oscillator is below 30, and it rises beyond the high of the divergence. Open a short position when there’s a bearish divergence, the high of the oscillator is above 70, and it falls beneath the low of the bearish divergence.


The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
Kindly note that this article does not provide any investment advice. The information presented regarding past events or potential future developments is solely an opinion and cannot be guaranteed as factual, including the provided examples. We caution readers accordingly.

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Bart Bregman

Author / IQ Option expert: "My name is Bart Bregman, I have 9 years of full-time professional trading experience. I've been trading with IQ Option for more than 7 years, mainly on the shorter time frames doing technical analyses, and have many experience with Binary Options, CFDs, Options, and Crypto trading. There is no such thing as a bad trade! As a digital nomad trader, I'm mostly traveling all over the world. Follow my journey on Instagram at https://www.instagram.com/bart_bregman/. "

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