What it is
The CMO was created by Tushar Chande. It looks like RSI but is built differently: it puts the gains and losses in the same sum, so it reacts harder to strong runs and reaches its extremes more often. A reading of +100 means every candle in the window closed higher; -100 means every one closed lower.
That makes it a clean measure of one-sided pressure. It is used both to spot stretched moves that may pause and, crossing 0, to show which side currently controls momentum.
How it is calculated
1. For each candle, compare the close with the previous close. 2. Add up all the rises over the last 14 candles (Su) and all the falls as positive numbers (Sd). 3. CMO = 100 x (Su minus Sd) divided by (Su plus Sd). 4. Unlike RSI, there is no smoothing, so the line can jump quickly when a big candle enters or leaves the window.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Length | 14 | 2 to 200 | How many candles are counted. Shorter (9) is quicker and hits +50 and -50 more often; longer (20) is calmer and only reaches the extremes on strong trends. |
How to read it
How to trade it
- 1
Decide the trend first, for example gold above its rising 50 period moving average.
- 2
In that uptrend, wait for a pullback that takes CMO below -50.
- 3
Enter long when CMO crosses back above -50 on a closed candle.
- 4
Put the stop beyond the pullback low, for example 5 to 8 points below it on a 15 minute gold chart.
- 5
Target the recent swing high or 2 times the stop, and consider exiting if CMO pushes above +50 and then turns down.
The long idea is wrong if price closes below the pullback low, or if CMO falls back below -50 and stays there for more than a couple of candles.
WickSpeak writes a plain-English reading on the live candle for CMO: what it measures, whether buyers or sellers hold momentum right now, how to trade the current reading and what would cancel it. In Playbook, a condition can check when CMO crosses above or below zero, stays above or below zero, or is rising or falling.
WickSpeak Chande Momentum is one of the extra WickSpeak versions of the oscillators. The line is coloured by strength: faint when the reading is weak, glowing when it is strong, mint above the zero line and pink below it. Crosses of the zero line are marked only once the candle has closed, so a marker never vanishes after it appears. A gold marker shows a stretched reading, the strongest few percent of the indicator's own range. Divergences between price and the line are drawn on both the chart and the indicator, and a chip shows the same reading on a higher timeframe.
Best markets and timeframes
Works on any market. On gold and US30 it is most useful on 15 minute to 4 hour charts, where it filters pullbacks within a trend. On 1 minute charts it flips too often to be practical.
Common mistakes
- Selling every reading above +50. In a strong trend CMO can stay above +50 for a long time.
- Using the RSI levels of 70 and 30. CMO runs from -100 to +100, so the equivalent zones are +50 and -50.
- Ignoring the jumps. A single large candle leaving the 14 candle window can swing CMO sharply with no new price action.
Works well with
Questions traders ask
What is the difference between CMO and RSI?
Both compare gains and losses, but RSI smooths them and runs from 0 to 100, while CMO uses raw sums and runs from -100 to +100. CMO therefore moves faster and reaches extremes more often. An RSI of 70 is roughly a CMO of +40.
What are overbought and oversold levels on the Chande Momentum Oscillator?
The usual levels are +50 for overbought and -50 for oversold. Some traders use +70 and -70 on short settings to cut down the number of signals.
What is the best CMO period?
14 is the most common default. Chande's own examples also used 20. Shorter periods suit scalping, longer ones suit swing trading on 4 hour and daily charts.
Can CMO be used for trend direction?
Yes. Many traders simply read which side of 0 it sits on, or smooth it with a short moving average and trade in the direction of that line. Above 0 means up moves have outweighed down moves over the window.