Ultimate Oscillator: three timeframes weighted into one reading

What it measures

The Ultimate Oscillator computes buying pressure over three different lookbacks — short, medium and long — and combines them in a 4:2:1 weighting so the shortest dominates without being able to act alone.

It was built to solve a specific problem: single-period oscillators produce divergences that depend entirely on the period chosen, and changing the period changes which divergences exist.

Using three horizons at once means a divergence has to be visible across timescales before it registers, which removes most of the false ones.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   For each bar, buying pressure is the close minus the true low — the lower of this bar’s low and the previous close.

2. 2

   True range for the bar is the true high minus the true low.

3. 3

   For each of the three periods, sum buying pressure and divide by the sum of true range.

4. 4

   Combine as (4 × short + 2 × medium + long) divided by seven, as a percentage.

Settings

Seven, fourteen and twenty-eight with 4:2:1 weighting is the original and the ratios are load-bearing. Changing the periods without changing the weights shifts which horizon dominates in a way that is rarely intended, and doubling all three is the only adjustment that preserves the balance the design depends on.

How to read it

• Above seventy and below thirty are the conventional extremes and are reached less often than on a single-period oscillator, which is the design working.
• Williams’ own method required a divergence plus a break of the divergence extreme, not just a reading — the level alone was never the signal.
• Because the short period carries most of the weight, the indicator still responds quickly despite the long component.
• It is bounded between zero and one hundred, and unlike a stochastic it rarely pins to either end, because three horizons would all have to agree completely.

Where it misleads

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