Ultimate oscillator

Larry Williams's ultimate oscillator averages buying pressure over three lengths, commonly 7, 14, and 28, so one short window cannot dominate. Buying pressure is the close minus the true low. The oscillator looks for a divergence and then a break of that divergence, rather than a single oversold print.

Not investment advice. Nothing here is a recommendation to buy or sell anything. Backtests and historical studies are not guarantees, and a rule that worked in one sample can fail in the next. Trading can lose money. Links are for education, not endorsements. Do your own research.

Rules

Compute buying pressure and true range, then a weighted average of the three horizons with the shortest weighted most. Williams's buy requires a bullish divergence, a break above the divergence high in the oscillator, and, in the strict version, the second low of the divergence to sit under 30. Exit when the oscillator reaches a stated high or when price hits a stop.

Where AI fits

AI can code the three-horizon average and the divergence rule so the entry is not a hand-drawn line. It should count a divergence only with a mechanical pivot rule. Optimizing the three lengths separately is a large search and needs a sample the search never saw.

Markets

Equity indexes, liquid stocks, and futures.

Timeframes

Daily.

Risks

Divergence rules are easy to see on a finished chart and hard to define in code. The oscillator still fails in strong trends. Three windows create a false sense that the signal is confirmed by three indicators.

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