January 27, 2023  Tom McClellan 

    Posted by rbreese on 27th of Jan 2023 at 12:03 pm

    January 27, 2023  Tom McClellan   The chart is available.  onStock charts  if interested 

    The McClellan Price Oscillator for gold futures prices has reached a pretty high level, equivalent to what it did at the price top in March 2022, and it has just now turned down.  This is a bearish signal and could set off a pretty big pullback.

    The McClellan Price Oscillator is a cousin of the more famous McClellan A-D Oscillator.  My parents created both of these back in 1969.  That research grew out of their desire to get a better signal than could be gotten from looking just at moving averages alone.  Together, they wondered about finding the difference between two moving averages, and this was well ahead of when Gerald Appel did the same thing with his Moving Average Convergence-Divergence (MACD) indicator.

    A McClellan Price Oscillator employs prices for any stock, index, commodity, or futures price series.  One calculates two exponential moving averages(EMAs), known as the 10% Trend and 5% Trend.  Those percentage numbers refer to the “smoothing constant” used in the calculation of each EMA.  The smoothing constant governs how much weight is given to the most recent data, so for calculating a 10% Trend you would multiply today’s closing price by 10%, and then add that to 90% of yesterday’s 10% Trend value.  A larger smoothing constant means a faster response to price movements.

    The chart below shows the 10% Trend (red) and 5% Trend (green) for the April gold futures contract.  The fact that they have become spread far apart is another way of saying that the Price Oscillator has risen to a high value, because the Price Oscillator represents the distance between those two EMAs.


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