The Chande Momentum oscillator was invented by a gentleman named Tushar Chande and was released to the public in 1994. It measures daily momentum and doesn't smooth its results, which leads to more overbought and oversold conditions. The Chande Momentum Oscillator oscillates between the levels of +100 and - 100, with over +50 reading overbought and under -50 reading oversold. Additionally, when it crosses the zero-line, the oscillator can be used as a confirmation signal.

The Chande Momentum Oscillator adds up all the recent higher closes and all the recent lower closes and divides them by the sum of all price movement over a given period of time. That number is then multiplied by 100 to give it its oscillating range.

When the Chande Momentum’s reading is above +50, this represents a bullish opportunity.

When the Chande Momentum’s reading is below -50, this represents a bearish opportunity.

Calculation:

Chande Momentum Indicator = SUM( H ) – SUM( L )  /  SUM( H ) + SUM( L )* 100

Where:

SUM( H ) = the sum of higher closes over N periods

SUM( L ) = the sum of lower closes over N periods