Price Momentum Oscillator (PMO)

The one-bar rate of change, smoothed twice so only sustained moves show.

What it measures

PMO, from DecisionPoint, smooths the one-bar percentage change with one exponential average, multiplies by 10, and smooths it again. With signalEMAPeriods, an EMA of PMO is added as a signal line.

How traders read it

Traders read PMO crossing its signal line as a turn and its distance from zero as the strength of the trend. Its levels depend on the instrument’s volatility, so compare them with its own history.

Formula

change = (close / previous close) × 100 − 100
PMO = smooth(10 × smooth(change, first), second)
signal = EMA(PMO, signalEMAPeriods)

smooth is DecisionPoint’s custom smoothing: an exponential average whose weight is 2 / periods, where an ordinary EMA uses 2 / (periods + 1). The signal line is an ordinary EMA. Each average starts from a simple average of its first values. firstEMAPeriods and secondEMAPeriods must be at least 2.

Settings and output

Call: pmo(firstEMAPeriods, secondEMAPeriods, signalEMAPeriods)

Setting	Chart default
`firstEMAPeriods`: First EMA Periods	35
`secondEMAPeriods`: Second EMA Periods	20
`signalEMAPeriods`: Signal EMA Periods	10

What you get: a list of 2, in this order: 1. a number (“PMO”); 2. a number (“PMO Signal Line”).

Warm-up: with pmo(35, 20, 10), it asks for 0 bars of history and a run-up of 66, and its first value came on bar 64 of the example data.

Chart

Price Momentum Oscillator (PMO) drawn by its own code on example prices

The prices are made up, hourly, and the same on every page, so the chart shows how the indicator behaves, not how a market behaved.

In an algorithm

function onIntervalClose() {
  const lines = pmo(35, 20, 10);
  if (OPEN_POSITIONS_COUNT === 0 && lines[0] > lines[1] && lines[0] < 0) {
    openPosition("BUY", { quantity: 10000, stopLossPips: 30, takeProfitPips: 60 });
  }
}

Without signalEMAPeriods, pmo(35, 20) gives a single number.