Introduced by Larry Williams, the Ultimate Oscillator combines the price action for three different time periods which represent short, intermediate, and long term market cycles, into one number. Typically a 7-day period, a 14-day period, and a 28-day period are used. The oscillator moves between 0 and 100 with 50 as the center line. 70 and 30 represent overbought and oversold levels. Trading signals are also derived from divergence and a breakout in the Oscillator’s trend.
Chart courtesy of Prophet Financial Systems (www.prophet.net)