PriceZoneOscillatorLE

Description

The PriceZoneOscillatorLE strategy generates Long Entry signals when the Price Zone Oscillator (PZO) reaches certain levels. Uptrend and non-trending market conditions are considered in this strategy. To check for trend existence, PriceZoneOscillator strategies use the Average Directional Index (ADX). If the ADX indicates trending conditions, an exponential moving average (EMA) is used for defining trend direction. By default, the strategy employs the 14 period ADX and the 60 period EMA.

In case the uptrend mode is spotted (ADX > 18, price above the EMA), Long Entry signals are issued when:

  • the PZO plot crosses the "-40" level from below, or

  • it surpasses the "+15" level after crossing the zero line from below.

In non-trending conditions (ADX < 18), these signals are issued when the PZO plot crosses either the "-40" or "+15" level from below.

Input Parameters

Parameter Description
price The price for which the PZO and EMA are calculated.
length The number of bars used to calculate the PZO and the ADX.
ema length The number of bars used to calculate the EMA.

Further Reading

1. "Entering the Price Zone" by Walid Khalil and David Steckler. Technical Analysis of Stocks & Commodities, June 2011.

Backtesting is the evaluation of a particular trading strategy using historical data. Results presented are hypothetical, and there is no guarantee that the same strategy implemented today would produce similar results.

Technical analysis is not recommended as a sole means of investment research.

For educational purposes only. Not a recommendation of a specific security or investment strategy.

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