In his book Technical Analysis Of The Financial Markets, John J. Murphy explains that using oscillators provides three benefits:
Overbought and oversold conditions warn that price trend is overextended and vulnerable.
Divergence between oscillator and price action shows hidden strength or weakness in the market, which is not apparent in the price action.
The crossing of the zero line can give an important trading signal.
The formula depends on only one condition: If today’s closing price is higher than yesterday’s, then the volume will have a positive value (bullish). Otherwise, it will have a negative value (bearish).
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The indicator was revised and updated
MQ4/MT4 version.
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