The Chande’s Momentum Oscillator for the Metatrader 4 trading platform is a great technical tool for spotting oversold and overbought market conditions.
It’s a great working forex oscillator when used together with a trend trading indicator.
The Chande’s Momentum Oscillator deploys two extreme values, -100 and 100.
Value -100 indicates the currency pair is extremely oversold.
Value 100 indicates the currency pair is extremely overbought.
The oscillator trend is considered to be bullish when the value trades above the 0.00 level and bearish when the value trades below the 0.00 level.
The oscillator is considered to be overbought when it crosses the 50 value (upper blue line) and considered to be oversold when it crosses the -50 value (lower blue line).
As mentioned before, use this oscillator together with a trend following indicator and trade in the direction of the underlying trend.
Avoid trading oversold/overbought signals from the Chande’s Momentum Oscillator indicator against the trend.
The default oscillator period is set to 14 but can be changed to whatever value you need.
It’s a good trading oscillator that can be applied to any trade style, including scalping, day trading and swing trading.
Free Download
Download the “chandes-momentum-oscillator.mq4” MT4 indicator
Indicator Chart (USD/JPY M15)
The USD/JPY 15-minute chart below displays the Chande’s Momentum Oscillator Metatrader 4 indicator in action.
Basic Trading Signals
Signals from the Chande’s Momentum Oscillator Metatrader 4 forex indicator are easy to interpret and goes as follows:
Buy Signal: Go long when the Chande’s Momentum Oscillator crosses back above -50 from below. Please remember the overall trend must be up.
Sell Signal: Go short when the Chande’s Momentum Oscillator crosses back below 50 from above. Please remember the overall trend must be down.
Trade Exit: Use your own method of trade exit.
Chande Momentum and Alligator Forex Strategy MT4
This MT4 strategy uses the Chande’s Momentum Oscillator and the Alligator Indicator to identify high-probability trades on M1, M5, and H1 charts.
It focuses on catching moves in the direction of the main trend while confirming momentum with the oscillator.
The Alligator lines provide the overall trend direction, while the Chande’s Momentum Oscillator signals when momentum is returning in line with that trend.
This combination helps traders enter trades with better timing and avoid false signals during pullbacks or minor corrections.
Buy Entry Rules
- Confirm that the Alligator shows an uptrend, meaning the Jaw, Teeth, and Lips are aligned upward.
- Wait for the Chande’s Momentum Oscillator to cross back above -50 from below.
- Enter a buy trade once the oscillator crosses -50 while the Alligator confirms the uptrend.
- Place a stop loss below the most recent swing low or below the Alligator’s teeth line.
- Take profit at previous resistance levels or set a 1:1.5 to 1:2 reward-to-risk ratio.
Sell Entry Rules
- Confirm that the Alligator shows a downtrend, with the Jaw, Teeth, and Lips aligned downward.
- Wait for the Chande’s Momentum Oscillator to cross back below 50 from above.
- Enter a sell trade once the oscillator crosses 50 while the Alligator confirms the downtrend.
- Place stop loss above the most recent swing high or above the Alligator’s teeth line.
- Take profit at previous support levels or a 1:1.5 to 1:2 reward-to-risk ratio.
Advantages
- Combines trend and momentum for higher accuracy.
- Works well on multiple time frames, including M1, M5, and H1.
- Clear visual trading signals make it beginner-friendly.
- Reduces false trades by requiring both momentum and trend alignment.
- Suitable for both fast scalping and slightly longer intraday moves.
Drawbacks
- Signals may lag slightly on fast-moving markets, especially on M1 charts.
- Whipsaw movements during low volatility periods can trigger false entries.
- Multiple trades in quick succession can reduce overall profitability if not managed carefully.
- The strategy requires constant monitoring on shorter time frames.
- Trend reversals can occur abruptly, making risk management essential.
Case Study 1
On EURUSD M5, the Alligator showed a clear uptrend with lines aligned upward.
The Chande’s Momentum Oscillator crossed back above -50 after a pullback.
A buy trade was opened with a stop loss below the recent swing low.
Price moved in line with the trend for 29 pips before reaching resistance, allowing a clean take profit.
The alignment of the oscillator with the Alligator ensured the trade was entered in the right direction.
Case Study 2
On GBPUSD H1, the Alligator indicated a strong downtrend.
The Chande’s Momentum Oscillator crossed back below 50 from above, confirming momentum in the selling direction.
A sell trade was opened with a stop loss above the recent swing high.
The market moved downward for 75 pips before slowing at a support level.
Waiting for both indicators to align prevented a premature entry during a brief retracement.
Strategy Tips
- Only enter trades when both the oscillator and Alligator confirm the trend and momentum.
- Use a tight stop loss on M1 and M5 charts due to fast price movements.
- Be patient and avoid entering during low liquidity periods or news spikes.
- Consider taking partial profits in shorter time frames for scalping trades.
- Backtest the strategy on each time frame to adapt the take profit levels according to volatility.
- Adjust trade size depending on your risk tolerance and the speed of the time frame.
- Do not chase trades; wait for the oscillator cross and Alligator trend alignment.
Download Now
Download the “chandes-momentum-oscillator.mq4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: Chart pattern indicator
Customization options: Variable (Last Bar Only, CMO Range) Colors, width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: Oscillator
