- 1 Introduction to the Chande Forecast Oscillator
- 2 Adding the Chande Forecast Oscillator to the IQ Option platform
- 3 The Chande Forecast Oscillator indicator’s formula
- 4 How to use Chande Forecast Oscillator?
- 5 Pros and Cons
- 6 Q&A
- 7 GENERAL RISK WARNING
Technical indicators are designed to help you make accurate decisions in trading. There are plenty of them on the IQ Option platform. It is a good idea to get familiar with them so you can choose the ones that suit you best. To make this choice easier I describe them for you regularly. Today I will introduce the Chande Forecast Oscillator.
Introduction to the Chande Forecast Oscillator
The Chande Forecast Oscillator measures upward and downward momentum without smoothing the results, activating the oversold and overbought penetrations more often. It ranges between -1 and +1. It falls into oversold and overbought areas when oscillates below -0.5 or above +0.5.
There are three key matters for the oscillator.
- First, the timeframe a trader chooses has a great influence on the signals.
- Second, the signals from the absolute oscillator levels are often less credible than the signals received from the recognition of the patterns.
- Third, in the case of a strong trend in the market, the oversold and overbought indicators are not very successful.
Adding the Chande Forecast Oscillator to the IQ Option platform
Setting up the oscillator comes down to finding its name on the list of indicators. To access this list you should first click on the chart analysis icon. Next, choose the “Momentum” from the available categories. A new list will unfold. You will find the Chande Forecast there.
The Chande Forecast Oscillator indicator’s formula
The Chande Forecast Oscillator draws a line on the chart. It is calculated as the difference between the closing price and the n-period linear regression of the forecasted price.
Chande Forecast Oscillator = [(Close(i) – Linear Regression) x 100] / Close(i)
Fortunately, the IQ Option platform counts and draws the indicator line itself. Counting the linear regression manually would be highly problematic especially on intraday charts.
How to use Chande Forecast Oscillator?
The Chande Forecast Oscillator can be used in a few ways. The first one requires adding a moving average with period 10. When the indicator exceeds the moving average, it produces a bullish signal. A bearish one will occur when the indicator falls beneath the moving average.
The moment the Chande Forecast indicator crosses below or above the 0 line can be utilised as a confirmation of the signal given by different moving averages crossovers.
Another option is to use the Chande Forecast as a measurement of the trend strength. Simply check the oscillator value and it will indicate whether the anticipated trend will be strong or weak.
Lastly, it can be used to catch negative and positive price divergences between the oscillator and the underlying asset. By negative divergence we mean the situation when the price of the asset is rising, but the Chande Forecast is falling. A positive divergence is in the opposite scenario: the price on the chart is falling but the indicator is going up. Trading divergences can be the best Chande Forecast Oscillator trading strategy.
Pros and Cons
- ✅ Provides valuable signals for potential trade opportunities
- ✅ Can be used to measure trend strength and identify divergences
- ✅ Applicable on various timeframes and trading instruments
- ❌ May provide false signals in strong trending markets
- ❌ Requires experience and additional tools for accurate interpretation
|Chande Forecast Oscillator (CFO)
|How It’s Used
|Measures upward and downward momentum
|Helps identify potential trend reversals and entry points
|Provides valuable signals through pattern recognition
|Assists in making accurate trading decisions
An example of using the Chande Forecast Oscillator on the IQ Option platform
In the following example, you can notice a negative divergence. The price of the EURUSD currency pair is rising. At the same time, the Chande Forecast Oscillator is falling. The moment to enter a sell position requires some additional signs such as candlestick formation.
Tushar Chande has created a whole family of indicators. His 25 years of market experience tells us to trust his indicators. They usually eliminate some of the disadvantages of classical technical analysis indicators. However, it should be remembered that each indicator is only an arithmetic transformation of historical price data. Indicators are intended to help in chart interpretation. However, they will never replace it. At IQ Option you will also find the Chande Momentum Oscillator, which is also worth getting to know.
This is all you need to know about the Chande Forecast indicator. Head over to your IQ Option free demo account and practice using it on the platform. You can learn there to catch the signals on time to make profitable transactions. Then, you are ready to switch to the live account and start making real money.
Best of luck!
- Q1: How does the Chande Forecast Oscillator differ from other momentum indicators?
- A1: Unlike many other momentum indicators, the Chande Forecast Oscillator does not smooth out results, making it more sensitive to oversold and overbought conditions, and providing more frequent signals.
- Q2: What are the key factors to consider when using the Chande Forecast Oscillator?
- A2: The timeframe, pattern recognition, and the strength of the prevailing trend are important factors to consider when using the Chande Forecast Oscillator for trading.
- Q3: Can the Chande Forecast Oscillator be used to identify divergences?
- A3: Yes, the Chande Forecast Oscillator can help identify negative and positive price divergences between the oscillator and the underlying asset, which may indicate potential trend reversals.
- Q4: How can I practice using the Chande Forecast Oscillator before using it in live trading?
- A4: You can practice using the Chande Forecast Oscillator on a demo account, such as the IQ Option free demo account, to familiarize yourself with its signals and make accurate trading decisions before using it in live trading.
- Q5: What other indicators can be used in conjunction with the Chande Forecast Oscillator?
- A5: The Chande Forecast Oscillator can be used with moving averages, such as the 10-period moving average, to provide additional confirmation for trade signals and enhance decision-making.
GENERAL RISK WARNING
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