Breakdown oscillator is based on the observation that the longer the price stays within the lower Bollinger Bands line, the higher the probability of its falling.
It has six input parameters:
- Period - calculation period
- Band period - Bollinger Bands calculation period
- Deviation - Bollinger Bands deviation
- Slope factor - the stronger the downward movement, the greater the negative value of the oscillator.
- Applied price
- Upper level - upper level value (lower level = 0)
Calculation:
Breakdown = 100.0 * EMA / Bottom
where:
EMA = EMA(Difference,Period) Difference = Applied price - Bottom + Slope factor * (SMA-PrevSMA) Bottom = SMA - Deviation * StdDev StdDev - StandardDeviation(Applied price,Band period) SMA = SMA(Applied price,Period)
Fig. 1. Breakdown oscillator
Fig. 2. Breakdown oscillator+Bollinger Bands
