The oscillator is an extension of the moving average oscillator system, it measures acceleration/deceleration, overbought/oversold situations, and trading signals. It can be used as a trading system or as an oscillator.

The standard formula is as follows: the fast line is the difference of two exponential moving averages in which the first one has a shorter time span than the second one; (Moving Average Oscillator). The Signal line is an exponential moving average of the fast line.

Gerard Appel, who originally developed this formula, suggests a 12 and a 26 day to calculate the fast line and a 9 day period to get the signal line.

T.E Aspray has tested different combinations of inputs for the three exponential moving average values and this optimisation has led him to the conclusion that a 10-20-9 days was the most profitable combination.

Besides this optimisation, Aspray has also developed a new indicator, which is a variation on the MACD oscillator, in order to anticipate crossovers;

This indicator is the combination of two lines; - a) MACD-H being the histogram version of the MACD. b) MACD-Mo being a 3 day standard moving average of the 10 day momentum of the MACD-H.

Buy and Sell signals are given when the fast line crosses the slow line and confirmed on the crossing of the zero line, although this confirmation tends to come very late.

Fast line below signal line has a bearish indication and fast line above signal line has a bullish indication.