How to use the Predator Momentum Oscillator
The Predator Momentum Oscillator (PMO) should be intuitive for traders familiar with oscillator indicators. Above the Zero line, things are generally bullish (the momentum is to the upside), below the line is generally bearish (momentum is to the downside). The red bars on the histogram show where there is declining momentum and green bars show that momentum is increasing. There can be times when the trend is clearly bearish, but the PMO highlights a shift prior to a change in trend and alerts the trader in advance with the histogram changing colour.
We find that the PMO works best with our Predator indicator and they are designed to compliment each other. For example, at the November ’21 cycle top Predator was still showing bullish, but the PMO showed that momentum was rapidly decreasing, alerting the trader ahead of time. We can see prior to the cycle top that the PMO printed a bearish divergence, giving the trader yet another alert that price action was likely to revert to the downside.
Green dots print when we have bullish confluence in price momentum and volume momentum, and print red when there is bearish confluence to the momentum. The PMO can be used in this manner as a risk management tool, complimenting standard technical analysis. For example, we knew that in June ’21 there was strong support at the $30,000 level for Bitcoin and we saw downside momentum decreasing and even begin to flip bullish before price started to rally. Therefore, if the PMO was used to risk off the trader would have decreased or closed any short exposure, as the bearish trend was losing momentum and saved themselves from a significant loss. Further more, we can see that when we got a new all time high, momentum did not follow, showing it wasn’t a strong move and we subsequently plotted a bearish divergence. The move was weak and the strong confluence for bearishness kicked in.
This tool was created by filbfilb, checkout the video below as he walks through how to use the Predator Momentum Oscillator.
Disclaimer: Nothing within this article should be misconstrued as financial advice. The financial techniques described herein are for educational purposes only. Any financial positions you take on the market are at your own risk and own reward. If you need financial advice or further advice in general, it is recommended that you identify a relevantly qualified individual in your Jurisdiction who can advise you accordingly.