CMO

What it is

The Chande Momentum Oscillator (CMO) compares total gains to total losses over the lookback window and scales the result to a fixed -100 to +100 range. Unlike RSI it uses unsmoothed sums, which makes it snappier, and it is symmetric around zero rather than centered on 50.

How it is calculated

CMO = 100 x (sum of up-moves - sum of down-moves) / (sum of up-moves + sum of down-moves) over the period (default 9) on the chosen source. If every bar closed higher, CMO reads +100; if every bar closed lower, -100; equal buying and selling pressure gives 0.

How to read it

The pane shows the "cmo" line with "overbought" (+50) and "oversold" (-50) guide lines around an implicit zero midpoint. Above +50, gains have dominated heavily over the window; below -50, losses have. The zero line separates net-bullish from net-bearish pressure and can serve as a simple direction filter. Because the sums are unsmoothed, the line moves faster and hits its extremes more often than RSI.

What to look for

• Overbought / oversoldContext

  Beyond +50 or -50 the window is dominated by one side — stretched conditions in a range, persistence in a trend.

• Centre-line crossContext

  Zero crosses mark the balance of gains versus losses flipping — a quick momentum-direction gauge.

• DivergenceContext

  Price extremes not matched by CMO extremes indicate weakening one-sided pressure.

When to use it

CMO fits short-term traders who want a faster, symmetric alternative to RSI on liquid markets, and Chande also proposed using its absolute value as a trendiness gauge. As a bounded oscillator it misleads in strong trends — it will pin near an extreme while the move runs on, so do not fade +50/-50 readings against a confirmed trend. The short default period makes it noisy on very quiet instruments.

Works well with

Settings explained

period

Default 9 — the gain/loss summation window. Lower values make an already fast oscillator faster still; raising it toward 14-20 slows it closer to RSI-like behavior.

source

Default close — the price series whose bar-to-bar changes are summed.

Limitations and common mistakes

• Unsmoothed sums make it noticeably noisier than RSI at the same period.
• Pins at extremes during strong trends, like every bounded oscillator.
• The +50/-50 zones are conventions, not calibrated probabilities.

References

• Origin: Tushar Chande, 1994.

This page explains how an indicator is calculated and read. It describes past data, not what price will do next, and it is not a recommendation to trade. Read the disclaimers.

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