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10.5 Centre of Gravity Oscillator

The Centre of Gravity (CG) oscillator by John Ehlers is a comparison of recent prices against older prices within a given past N days.

Prices from those N days are imagined as weights placed on a beam, equally spaced, and the CG oscillator is then the balance point or centre of gravity along that beam. If p1 is today’s price, p2 yesterday’s, etc, then the formula is

       1*p[1] + 2*p[2] + ... + N*p[N]
CG = - ------------------------------
        p[1] +   p[2] + ... +   p[N]

The “-” sign puts the CG on a scale of -N at the oldest end, up to -1 at the newest prices end. But those extremes are not reached, instead CG hovers around the midpoint -(N-1)/2. The scale is not important, only the shape of the curve, which rises if recent prices are higher, and falls if recent prices are lower.

Ehlers suggests looking at a past 10 days, and that’s the default. He notes that if N is very small the CG becomes quite noisy, and that if N is large it tends to become very unresponsive.

10.5.1 Additional Resources

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