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Absolute Price Oscillator

The APO is an indicator based on the difference between two Exponential Moving Averages (EMA). It is calculated in a similar way as the MACD, by subtracting the longer EMA from the shorter EMA. The indicator is expressed as an absolute value. The Percentage Price Oscillator is the same except expressed in percentage terms.

Shorter EMA - Longer EMA

A positive indicator value indicates an upward movement, while negative readings signal a downward trend. It is clear that the higher the value of the shorter EMA from the value of the longer EMA, the higher the APO reading and hence the stronger the upward trend. On the other hand, higher values of the longer EMA from the shorter EMA provide evidence for a stronger downside momentum.

The greater the indicator value is the more extreme the price movements have been. Note that for higher priced instruments the indicator will show a higher value, this is not the case with the PPO.