Dynamic Momentum Oscillator

The Dynamic Momentum Oscillator (DMO) is a technical indicator designed to measure and forecast the momentum of price.

It's core consists of a:

• Momentum calculation and;
• Dynamic range assessment (range of periods)

Combined together, this indicator provides thorough insights into trending markets and OB/OS (overbought/oversold) conditions.

How is the DMO indicator different to the RSI and Stochastic?

The DMO stands out from traditional momentum indicators like the RSI or Stochastic Oscillator because it focuses on the momentum based on the price movement. This allows it to provide signals that are more in tune with the current market conditions, especially when there's a lot of ups and downs in the market.

The DMO was originally designed to be used in two ways:

• Keep an eye out for possible changes in trends when the DMO goes above the overbought level or below the oversold levels.
• Watch for crossovers: you should consider buying when the DMO line goes above zero and think about selling when it drops below zero.

How can it be used in Forex?

For volatile instruments such as Forex and Indices, the DMO is should be used for trend entry signals whenever the DMO line breaks into the Oversold or Overbought areas. Using the oscillator this way is often referred to as "Lambert's Way" which is the correct way to use the CCI Oscillator.

For example:

• When the DMO breaks above +0.3, enter a Buy position.
• When the DMO breaks below the -0.3, enter a Sell position.

This indicator displays it's colored signals in such way to reflect this style of trading.