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 + 2*p + ... + N*p[N] CG = - ------------------------------ p + p + ... + 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.
Copyright 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2014, 2015, 2016, 2017 Kevin Ryde
Chart is free software; you can redistribute it and/or modify it under the terms of the GNU General Public License as published by the Free Software Foundation; either version 3, or (at your option) any later version.