McClellan Oscillator Oil Technical Analysis and McClellan Oscillator Trading Signals

Developed by McClellan.

The McClellan Oscillator is an indicator that is based on smoothing the difference between the number of bullish candles & bearish candlesticks. This oil technical indicator looks similar to the traditional MACD.

McClellan Oscillator

Oil Technical Analysis & How to Generate Crude Trading Signals

This Oscillator is a momentum indicator that can be traded in the same way as the MACD indicator. There are 3 techniques that McClellan Oscillator can be used to generate oil signals.

Zero Center Line Crossover Signals:

Bullish Signals- When the oscillator crosses above zero center-line a buy crude trading signal is given.

Bearish Signals- When the oscillator crosses below zero center-line a sell crude trading signal is given.

Technical Analysis in Oil Trading

Divergence Oil Trading Signals:

Looking for divergences between the McClellan Oscillator and crude oil price can prove to be very effective in spotting potential reversal and/or oil trend continuation points in crude oil price movement.

There are several types of divergences:

Classic Crude Trading Divergence (Regular Crude Trading Divergence)

• Bullish Divergence: Lower lows in crude oil price action & higher lows in the McClellan Oscillator.

• Bearish Divergence: Higher highs in crude oil price & lower highs in the McClellan Oscillator.

Hidden Crude Trading Divergence Setup

• Bullish Divergence: Higher lows in crude oil price action & lower lows in McClellan Oscillator.

• Bearish Divergence: Lower highs in crude oil price action and higher highs in McClellan Oscillator.

Oversold/Overbought Levels on Indicator

The McClellan Oscillator is also used to identify potential overbought and oversold levels in crude oil price action movements. The overbought and oversold conditions are generated when the oscillator moves to extreme levels on one side and starts to turn, however, in a strong trending market the oscillator will stay in the overbought and oversold levels for a long time. It is not recommended to trade overbought and oversold levels to generate crude trading signals. Best signal to use is the Center-line cross over signals to generate oil signals.