The Ultimate Oscillator was developed by Larry Williams and uses a weighted average of three different time periods to avoid the limitations of similar but single period indicators.
Ultimate Oscillator values fluctuate between 0 and 100 with values below 30 possibly oversold and values above 70 possibly overbought.
A Buy signal could be indicated by the following 3 steps: a bullish divergence as the UOSC makes a higher low as the Price makes a lower low; the UOSC low should be below 30; and the UOSC value then rises above the high of the initial divergence.
And a Sell signal could be indicated by the following 3 steps: a bearish divergence as the UOSC makes a lower high as the Price makes a higher high; the UOSC low should be above 70; and the UOSC value then falls below the low of the initial divergence.
Perform the following for each of the 3 Moving Average Periods (usually 7, 14 and 28):
1. Buying Pressure = Close - Minimum(Low, Close[-1])
2. True Range = Maximum(High, Close[-1]) - Minimum(Low, Close[-1])
3. Averagen = Sum of 1 for Period / Sum of 2 for Period
4. UOSC = 100 * (((Average7 * 4) + (Average14 * 2) + Average28) / 7)