Chande momentum oscillator
A −100 to 100 momentum reading based on the sum of recent gains versus losses — conceptually close to RSI, but calculated without RSI's internal smoothing, so more sensitive.
What the numbers mean
The lookback sets how many bars of gains and losses are summed. Unlike RSI, the sums are not smoothed and the result is scaled −100 to +100, which makes CMO reach its extremes more readily at the same period setting.
- 9, 14 or 20 — the lookback; shorter reaches extremes far more often
- +50 / −50 — the conventional overbought and oversold levels
- 0 — the line separating net gains from net losses over the window
- Unlike RSI, the sums are not smoothed, which makes it more reactive at the same period
How it is used
Overbought and oversold are conventionally taken at +50 and −50, with the zero line marking whether gains or losses have dominated the window. It is also used as a variable input to adaptive moving averages.
- Above +50 → overbought; below −50 → oversold
- Zero-line crossings → which side has dominated the window
- Also used as the volatility input to adaptive moving averages
How it relates to everything else
CMO is RSI without Wilder's smoothing and on a −100 to +100 scale, so it moves further and faster at identical settings. Chande designed it partly as an input for his variable-period moving average, where a high absolute reading shortens the average automatically.
- RSI without smoothing, rescaled to ±100
- Feeds the variable index dynamic average and similar adaptive tools
- Needs a trend filter for the same reason RSI does
What to watch for
Without smoothing it is jumpy, and its extremes come often enough that they need a trend filter to be worth acting on.