Oscillator Index

The Oscillator Index (OI) is a technical indicator used in technical analysis to identify whether an asset is overbought or oversold. It fluctuates between 0 and 100 - the higher the value, the more overbought the market, and the lower the value, the more oversold.

The OI is constructed by calculating the difference between the average closing price for a certain period and the average closing price for a longer period. The most commonly used periods are 14 and 3 days, respectively.

Formula for calculating OP:

RO = (14-period MA - 3-period MA) / (14-period MA) x 100

Where:

1. MA - moving average closing price

Thus, the OI shows the deviation of the short-term average from the long-term average and expresses it as a percentage. It works well in trending markets, helping to identify trend reversals when extreme values ​​are reached.

OI is widely used by traders along with other oscillators such as stochastic oscillator and RSI. When combined with directional indicators such as moving averages, it allows you to build more reliable trading strategies.