Coppock oscillator bar (COB) – A top-level analysis

Fundamentally, when we talk about the Coppock Oscillator Bar, we have to recourse to the Coppock Curve. It is the basis on which we try to derive the best point on the momentum and price movements to make principal market and trading decisions. Moreover, it is one of the most accommodating and flexible ways traders can predict their future market behavior.

The Coppock curve designed by Edwin Coppock has evolved into one of the most technical analysis tools for traders in the market. It uses simple and basic analytical terms to predicate the long-term and, possibly, the short-term market.

3 best indicators to use for day trading

The Coppock curve derives its mathematical verification from monthly installments of progressive market trends and price movements. Also, it calculates the momentum of the particular underlying assets and securities or ETFs to understand their long-term viability and values.

How to use the coppock curve

We know the Coppock Indicator is a long-term analytical momentum-based oscillator. It does this based on Rate-Of-Change and includes a Weighted Pricing Average to smooth out the data.

Employing the Coppock curve, you can use either the Aroon Oscillator or the Klinger Oscillator. These are Coppock Oscillator Bars that are trusted for their high-level accuracy and user-friendly format. 

The Aroon Oscillator is just an indicator that revolves around sustainable trends. It analyses the viability of a current market trend and the momentum’s possible durability. The Klinger Oscillator is a more technical analysis indicator that combines price movements with volume. Klinger uses increasing divergence and graph crossovers to generate trade signals.

Generally, you use the Coppock Oscillator Bar to recognize downward shifts and upturns in a Stock Market index in ten months. This is calculated as the ten-month WMA (Weighted Moving Average) sum of the 14-month change and the 14-month Rate Of Change for the index.

Formula:

—Coppock Curve = WMA↓10 of (ROC↓14 + ROC↓11)

—WMA↓10 represents the ten months Weighted Moving Average, and ROC represents the 14 monthly Rate Of Change.

Using this formula, you will understand security or ETFs’ price movements and momentum when you want to buy or sell.

The McGinley Dynamic

Notably, the Coppock Oscillator Bar depicts price movements and momentum of stocks or underlying assets on a weighted average of ten months. This is displayed over a histogram that pinpoints major upturns or downturns in the market over each constituent month. This is spread over a fourteen months timeframe and redacted over the preceding eleven months to analyze the rate of change in the price movements.

To effectively use this analysis, understanding the Coppock Curve’s dynamics is essential. When the curve reading moves to the positive territory or any zone above zero, it is safe for the trader to buy off the underlying asset. However, on a reading of negative or below the zero mark, the trader can pick off the sell signal.

Diagram showing S&P 500 monthly chart with Coppock Curve
Diagram shown S&P 500 daily chart with adjusted Coppock Curve settings

The role of the Coppock Oscillator bar in predicting market trends

Most importantly, the Oscillator displays the cumulative price direction of an underlying asset over a time frame in a legible manner.

Moreover, the Coppock Oscillator Bar can be merged with other technical momentum indicators to understand various aspects of the market. It can be used with the RSI (Relative Strength Index) Oscillator or the KST (Know Sure Thing) Oscillator. These oscillators can give you insight into different market behaviors and general tendencies. While observing the converging or diverging movements they depict can inform you of the price movements or when the asset is in overbought or in an oversold situation.

Careful utilization of the Coppock Oscillator Bar, with or without the combination of some other technical momentum indicators, will give you a better chance of success in the market.

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Conclusively

The Coppock Oscillator Bar shows you precisely the price movements, weight, and momentum of your target asset over a weighted ten months period. It is also satisfying to see clear signals on when to buy underlying assets or sell if you can read the signs from the central line.

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