Enhanced Chande Momentum Oscillator

Enhanced Chande Momentum Oscillator (Enh CMO)

📊 Description
The Enhanced Chande Momentum Oscillator is an advanced version of the classic Chande Momentum Oscillator with dynamic envelope boundaries that automatically adapt to market volatility. This indicator provides clear visual signals for potential price reversals and momentum shifts.
Key Features:

Original Chande Momentum Oscillator calculation
Dynamic upper and lower boundaries based on statistical analysis
Adaptive envelope that adjusts to market volatility
Visual fill area between boundaries for easy interpretation
Real-time values table with current readings
Built-in alert conditions for boundary touches
Customizable moving average types (SMA, EMA, WMA)

⚙️ Settings
CMO Settings:

CMO Length (9): Period for calculating the base Chande Momentum Oscillator
Source (close): Price source for calculations

Envelope Settings:

Envelope Length (20): Lookback period for calculating the moving average and standard deviation
Envelope Multiplier (1.5): Multiplier for standard deviation to create upper/lower bounds
Moving Average Type (EMA): Type of moving average for envelope calculation

📈 How to Use
Visual Elements
Lines:

White Line: Main Chande Momentum Oscillator
Red Line: Upper boundary (resistance level)
Green Line: Lower boundary (support level)
Yellow Line: Moving average of CMO (trend direction)
Purple Fill: Visual envelope between boundaries

Reference Lines:

Zero Line: Neutral momentum level
+50/-50 Lines: Traditional overbought/oversold levels

Trading Signals
🔴 Sell/Short Signals

CMO touches or crosses above upper boundary → Potential bearish reversal
CMO is above +50 and declining → Weakening bullish momentum
CMO crosses below yellow MA line while above zero → Momentum shift

🟢 Buy/Long Signals

CMO touches or crosses below lower boundary → Potential bullish reversal
CMO is below -50 and rising → Weakening bearish momentum
CMO crosses above yellow MA line while below zero → Momentum shift

⚡ Advanced Signals

Boundary contraction → Decreasing volatility, potential breakout coming
Boundary expansion → High volatility period, use wider stops
CMO hugging upper boundary → Strong uptrend continuation
CMO hugging lower boundary → Strong downtrend continuation

🎯 Trading Strategies
Strategy 1: Reversal Trading

Wait for CMO to touch extreme boundaries (red or green lines)
Look for divergence with price action
Enter counter-trend position when CMO starts moving back toward center
Set stop beyond the boundary breach point
Take profit near zero line or opposite boundary

Strategy 2: Momentum Confirmation

Use CMO direction to confirm trend
Enter positions when CMO crosses above/below yellow MA line
Hold positions while CMO remains on the correct side of MA
Exit when CMO crosses back through MA line

Strategy 3: Volatility Breakout

Monitor boundary width (envelope expansion/contraction)
When boundaries contract significantly, prepare for breakout
Enter in direction of CMO breakout from narrow range
Use boundary expansion as confirmation signal

⚠️ Important Notes
Best Timeframes

Scalping: 1m, 5m charts
Day Trading: 15m, 30m, 1H charts
Swing Trading: 4H, Daily charts

Market Conditions

Trending Markets: Focus on momentum confirmation signals
Ranging Markets: Focus on boundary reversal signals
High Volatility: Increase envelope multiplier (1.8-2.5)
Low Volatility: Decrease envelope multiplier (1.0-1.3)

Risk Management

Always use stop losses beyond boundary levels
Reduce position size during boundary expansion periods
Combine with price action and support/resistance levels
Monitor the real-time table for precise entry/exit levels

🔔 Alerts
The indicator includes built-in alert conditions:

"CMO Above Upper Bound": Potential reversal down signal
"CMO Below Lower Bound": Potential reversal up signal

Set these alerts to catch opportunities without constantly monitoring charts.
💡 Tips for Success

Combine with other indicators: Use with RSI, MACD, or volume indicators for confirmation
Watch for divergences: CMO making new highs/lows while price doesn't follow
Use multiple timeframes: Check higher timeframe CMO for overall trend context
Adjust settings for different assets: Crypto may need different settings than forex
Paper trade first: Test the indicator with your trading style before using real money

🎨 Customization Tips

Change colors in the Pine Script to match your chart theme
Adjust envelope length for faster (shorter) or slower (longer) signals
Modify envelope multiplier based on asset volatility
Hide the table if it obstructs your view by commenting out the table section


Complete trading solution: Pair with the Optimus Indicator (paid indicator) for multi-timeframe trend analysis and trend signals.
Together they create a powerful confluence system for professional trading setups.