Coffee Traders' Forum - A Discussion about Coffee Futures Trading


Coffee Traders Discussion Forum

Coffee Traders' Forum

Klinger Volume Oscillator and Parabolic SAR *PIC*

For over the 6 months shown on this daily candle graph of May coffee we see the declining wedge as beautifully bounded by the Parabolic SAR, narrowing into a nose cone. The Klinger Volume Oscillator has similarly converged as well as displaying the uptrending divergence with the downtrending coffee price. This is a bullish divergence all the while coiling and compressing the spring. Please notice the recent 4 bull dots of the Parabolic SAR coinciding with an apparent up signal given by the Klinger. The fork drawn from contract low pivot can be seen on the graph and price continues to honor this admittedly very embryonic assessment of coffee's price intention.

"""The Klinger Volume Oscillator was developed by Stephen J. Klinger and it has the same appearance as the traditional MACD indicator, but the difference is that the Klinger Volume Oscillator displays real-time imbalances between buying and selling pressure. This is a volume-based indicator that will help you in both short and long term analysis. The word Oscillator” means that it’s basically a bounded study and it has an upper limit value and it has a lower limit value. The tan line on the image is the KVO line. This line is a calculation of the difference between the 34-period and 55-period EMAs, which day traders call “volume force” (VF). The blue line is a normal 13-period EMA, which averages the fluctuation of the KVO line. The combination Klinger plus the Parabolic SAR is not very common among day traders. Yet, I find it effective, because of the difference between the two instruments - the KVO is a leading indicator while the Parabolic SAR is a lagging indicator. As we previously stated, leading indicators give many false signals. For this reason, we now add a lagging indicator, which will isolate a big part of the KVO head fakes, thus shedding light on high probability trades. Remember that as a typical lagging indicator, the Parabolic SAR needs a closing price before printing a dot. What I suggest here is to be in the market whenever the KVO line switches above its 13-period EMA if the Parabolic SAR supports this signal with at least three dots in the same direction. If there aren’t three dots in your direction, do not open a position. We close our position whenever we get three dots in the opposite direction."""