Ultimate Oscillator

Larry Williams's ultimate oscillator combines three timeframes of where the close sat inside the true range, with the shortest one weighted most. The goal was to reduce the false signals that a single-length oscillator gives when it is too fast, without the lag of one that is too slow. The scale is 0 to 100.

A divergence is the tool's main traditional use: price makes a lower low, the oscillator makes a higher low, then breaks its own prior oscillator high. Williams wanted that break in the oscillator, not just the divergence. The same logic runs in reverse at tops. The weights, 4, 2, and 1, are the design. Changing them creates a different indicator.

A higher low in the oscillator against a lower low in price, followed by a rise through the oscillator's prior swing high, is the bullish pattern. Preferably this happens after a dip through 30, so the market was actually pressed.

A lower high in the oscillator against a higher high in price, then a break of the oscillator's prior swing low, is the bearish pattern, preferably from above 70.

Trading the divergence the moment it appears, before the oscillator breaks its own swing. That break was the confirmation in the original method. Also replacing a simple RSI with this and expecting fewer problems. You still need the price level.

Three lengths means three arbitrary windows. A shock that dominates all three still dominates the blend. And the indicator does not know the higher-timeframe trend. A bullish divergence in a bear market is a bounce candidate, not automatically a new bull market.