The moving averages lengths are defined by the user. In the chart below of the E-mini Russel 2000 futures contract, the 9-day and 18-day moving averages are used:

When the 9-day moving average crossed over the 18-day moving average, the Price Oscillator crossed over the zero line. When a short-term moving average crosses over a long-term moving average, a bullish crossover occurs. Usually bullish crossovers are considered to be a good time to buy.

Likewise, when the 9-day moving average crossed below the 18-day moving average, the Price Oscillator crossed below the zero line. When a short-term moving average crosses below a long-term moving average, a bearish crossover occurs. Usually bearish crossovers are considered to be a good time to sell.

The Price Oscillator makes it easy to see moving average crossovers. The Price Oscillator is also a means to detect overbought and oversold conditions; this is discussed on the next page.

Next Page - Price Oscillator as an Overbought & Oversold Indicator